Credit cards are viewed as a must-have in today’s world. An SBI study done at the end of 2019 found that there are 74 credit card issuers in India. It also estimated that by 2024, credit card spends out of India are expected to touch Rs. 15 trillion, at a 23 percent compounded annual growth rate.
Everyone wants to live a high-flying life with the same gadgets, holidays, clothes, and accessories as their favorite celebrity. And why should today’s hard-working executives have to hold back on account of a price tag, when they can have access to credit instead? Moreover, the criteria for obtaining credit cards today are fairly inclusive. As long as you are earning a stable income and display the potential to pay back the bank or the NBFC that lent the money, it should not be much of a challenge for you to obtain a credit card.
As part of this discussion, we are going to address two very commonly posed questions: what are the most common credit card eligibility criteria, and how to apply for a credit card?
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Eligibility criteria
Let us begin with the credit card eligibility criteria. For example, if you wanted the Bajaj Finserv RBL Bank SuperCard, you would need to meet the following criteria.
Age – You need to be between 25 and 65 years old to be able to obtain a credit card.
Income – As discussed, you need to display a stable income. The creditor, or the bank, or NBFC that is extending credit needs this as an assurance of your ability to pay your debts.
Creditworthiness – If you have a proven track record of defaulting on payments, you might be in for some trouble. However, if you have a good track record with regards to bill payments, you are that much closer to obtaining your credit card. Additionally, a credit score of 750 or above is required for most credit cards.
We will go one step ahead and share a neat trick on how you can evaluate — and perhaps improve — your chances of obtaining a credit card.
Accept or opt for a pre-approval process that evaluates your eligibility without negative marking to your credit score, in the event that you are not eligible. Every credit card application that you attempt costs you some points off of your credit score. As a consequence, it is advisable to avoid applying indiscriminately. Pre-approval is usually something that will be offered very freely by banks and NBFCs. You might already have some offers among your emails. Alternatively, you can usually — as in the case of Bajaj Finserv RBL Bank SuperCard — just apply for a pre-approval by feeding your number on the bank or NBFC’s website.
You may not have a good credit score if you have never had a credit card or have never had to apply for a loan. Now, this might seem contrarian because if you have never needed that credit, is that not an indication that you are quite well-set financially? However, a lacking credit score often occurs when there is no history to be used as a basis for your score. You can opt for a credit card, where you pay in advance and thereby develop a credit history.
Another useful tip is to avoid checking your credit score too frequently because this action can affect your credit score negatively.
Apply for a credit card in three simple steps
Now that we have covered the criteria that are used to judge your eligibility, we are ready to address exactly how you can go about applying for your credit card in a simple three-step process.
Step 1 – Browse through the various credit cards available, and carefully consider which benefits match your lifestyle. You might need a fuel discount more than lounge access, or you might need free retail vouchers more than fuel discounts. Do not simply get a credit card that a friend, neighbor, or family member has. Choose one that gives you usable benefits, the keyword is usable. For example, there are 11 variations of the Bajaj Finserv RBL Bank SuperCard.
Another factor to check in this first stage is linked to points. Most credit cards allow users to earn points on each purchase. Draw up a few comparisons to help yourself identify which credit card is offering you the best bundle of benefits, and the best points-per-purchase deal for your lifestyle.
Step 2 – Check that the charges are agreeable to you. Some credit cards might not have a fee for the first year but might have fees in subsequent years. Keep an eye out and ensure that the charges sit well with you.
Step 3 – Assuming you have already undergone a pre-approval process, you can get your documents together and apply. Today, you do not need to take a few hours off to go and apply physically at a bank or at an NBFC’s office. You can simply apply online. You will usually need to submit proof of identity, address, age, and income. Documents like passport, Aadhaar and PAN card, voter’s ID, driving license, electricity bills, and salary slips will usually feature on the list of documents you should keep ready. You can even scan them with your phone for most applications.