What Factors Matter in a Credit Card Approval Process?
As the years progress, more financial institutions appear, and the existing ones expand their branches. Not only are they emerging and expanding, but they are also making their products more beneficial to customers to stay ahead in the competition.
One such product where financial institutions are offering maximum benefits is a credit card. They aim to make these products cater to individuals of all occupations and income categories.
With extensive features and advantages, financial companies are also making their credit card application process simplistic. You can apply for a card online just by making a few clicks in your smartphone or your computer.
However, you need to fulfil a few criteria to get quick approval for your application. Some of those criteria are mentioned below:
1. A high credit score
Generally, a high credit score means anything around 750 or above. With such a high score, you can easily avail a classic, platinum, or premium card.
There are cards like Bajaj Finserv RBL Bank SuperCard which offer various attractive features like welcome credit card reward points up to 20,000, up to 8 complimentary accesses to airport lounges, and security features like “In-hand security” and “Zero-fraud liability cover”.
You can find your pre-approved offer by providing only a few essential details like your name and phone number on their online portal.
However, you only require this credit score when applying for specific privileged credit cards.
On the other hand, you can avail a secured credit card if you have a low credit score. These cards are exceptional for improving the score and building a credit history.
Tip: Don’t make too many card applications. The financial institution checks your credit score with each application which, in turn, lowers your score.
2. A healthy credit history
Again, financial companies may check your credit history before approving your application. It will have high chances of approval if you have handled all your credit applications responsibly before.
On the other hand, any late payment of EMIs or other credit card bills can lead to your application getting cancelled.
3. Your credit utilisation
You may face rejection if you have a high credit utilisation even with a good credit history. High credit utilisation signifies you are a risky customer with possible of chances of defaulting in the future. Furthermore, you also portray yourself as credit hungry.
Lending companies don’t approve these habits in a customer, and hence, reject the applications.
Your credit utilisation must remain under 30% of your limit for the application’s approval. Also, keeping your utilisation within this percentage improves your CIBIL score.
4. Your occupation and income
Your occupation and income are two other crucial factors consider when you apply for credit cards.
In case you are salaried, you have to provide your salary slips for at least the past 3 months. Your credit card application has higher chances of approval if you have a higher income.
You may have to provide various documents like balance sheet, profit & loss account statement, and income tax returns if you are self-employed. The application can get approved more easily if you have a creditworthy business with a minimum vintage of 3 years.
5. Your debt-to-income ratio
The debt-to-income ratio or Fixed Obligation to Income Ratio (FOIR) is the ratio of your monthly income to your fixed monthly debts. Companies give preference to those customers who have a FOIR of 50% or less.
A lower monthly debt will make it easier for you to clear your card dues without defaulting.
6. Multiple other credit cards
Your credit card application may get denied if you already hold multiple credit cards. However, this factor depends on your income. For example, your application may get approved even if you have multiple credit cards but a high income.
7. The application form
Last but not least, your application itself is one of the critical factors for approval. Make sure to fill it correctly and avoid errors.
Do follow these points mentioned above along with the ones specific to your lender when you apply for a credit card, and your application will get approved quickly.
by Sahil Arora