A credit score of 750 or more is generally considered excellent in India. Still, many applicants find themselves in difficult situations, facing denial when applying for premium credit cards.
This contradiction clearly highlights that a credit score is important but still, it is not the sole determinant for the approval of premium, high end credit cards.
Let’s discuss some important reasons and considerations such as optimum credit scores, income stability, past loan settlement, payment history, over-all debt etc., that all credit card applicants must be aware of before applying for a premium credit card.
What can be considered as an ideal credit score?
According to Akshay Aedula, product and growth at CRED, “Credit score is an output of past financial decisions and an input for financial institutions to understand the level of risk that you may pose as a borrower. A score above 750 indicates that you can understand and manage credit responsibly, and that you have demonstrated a history of paying consistently and on time. It’s a strong signal of creditworthiness.”
“However, different issuers have different cutoffs for eligibility, and credit score is just one factor in decision-making. Beyond a good score, income, employment status, existing bank relationships all play a role.”
He further added, “A high score can also unlock higher limits, faster approval, and access to better cards. If the card you’d like has a higher credit score cutoff, you can set a target on CRED and the feature will provide personalized recommendations to guide you on the right actions to achieve it within the desired timeframe.”
Hence, a credit score of 750 or more is generally considered as a strong number for approval of new premium credit cards, personal loans etc. Still, there are numerous other factors that influence the decision of providing premium credit cards to applicants.
What are the other factors that influence premium credit card applications?
Employment stability and income: Premium and top notch credit cards come with stringent income requirements. For example, HDFC Bank’s Diners Club Black Card makes it mandatory to have a net monthly income of more than ₹2.5 lakhs for salaried individuals.
Not only this, if you are self employed then you must have an annual income of over ₹30 lakhs. Further, erratic job changes, gaps in employment etc., can project instability to the lenders and such developments can result in rejection of applications.
Credit utilisation and debt to income ratio: Now, even if you have an excellent credit score, still a high debt to income (DTI) ratio can be a serious drawback. Banks generally prefer individuals who have a DTI of less than 35%. On similar lines, utilising a significant portion of your credit limit i.e., credit utilisation ratio, this may indicate financial pressure and over dependence on credit.
Past credit behaviour and lack of accuracy in application: Mistakes in application forms such as incorrect address, incomplete documentation, wrong PAN and Aadhaar details etc., are all such factors that can result in immediate rejection.
Further, also applying for several different credit cards within a short period of time can project credit hungry behaviour, which can in turn adversely impact your credit rating and chances of approval.
Conclusion
Hence, given a high credit score is a significant asset, it is still important to consider other factors such as employment stability, income level, debt obligations, accuracy with application forms, and meeting all eligibility criteria.
For example, for a credit card that has an eligibility criteria of over ₹2 lakh monthly income, just a good credit score won’t suffice. Therefore, being aware of these rules, criteria and additional requirements can boost the prospects of seamless approval of your premium credit card applications.
Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit scores. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.