A credit card resembles that of a debit card. It is like a short knife which can be a dangerous weapon. If you do not choose it carefully, it would be very difficult to mention your expenditure.
The first step to applying for a credit card is understanding your credit score. But before that, one must understand how to apply for a credit card. Since your credit score dictates what kind of card you get, you have to have a very good score to qualify for the credit card.
Credit score
The credit score happens to be a three-digit number that grades you as a potential borrower. It is calculated by any credit bureau that goes through your history of the transactions that you make. Sometimes, you would be sure of the financial institution asking for the FICO score instead of your credit score.
Things like paying the bills and making on-time payments help build up your credit score. Also, if you do not apply for too many loans at once, you can increase your score. However, if you do the opposite of these, you can hurt your credit very much.
Consideration of the financial institution before issuing a credit card
Before you get hold of your credit card, the financial institution would assess your eligibility based on certain criteria. Some of these includes
- Age
Age is one important qualification factor that the bank checks before offering you a credit card. Especially you need to be at least 21 years to get a credit card.
- Bank account
If you can have a savings account in your name, it becomes easier to get a credit card.
- Income
One must have a regular source of income to get a credit card. Whether self-employed or salaried, you should choose a credit card according to your needs.
- Creditworthiness
As mentioned, good credit history can help you get your credit card easily. You can check to be creditworthy if you are sure that your credit score is good. Also, you can check the worthiness with the help of your CIBIL credit score.
Apart from that, your nationality or residential status also plays an important role while using the financial institution of any credit card. For instance, you need to be a resident of India to apply for only cards for Indian citizens. Also, you must go through the bank’s eligibility criteria or the financial institution that is offering you the credit card. Besides, you would require certain documents, including
- Passport size photographs
- Identity proof that consists of PAN card, Aadhar card, passports et cetera
- Residential proof
- Form 16
- Latest salary slips
- Bank statements
Apart from that, you would require the complete application form duly filled up along with these documents.
Once you apply for the credit card, you will have to wait for a few days so that the bank takes its time to approve your credit card. Once the card gets approved, you can instantly get the card. But the bank would take their time to verify all the documents before providing you with the credit card. In addition to that, you can buy things with the help of your credit card and pay later.
Other than that, you can also get the advantage of paying for a product or service in instalments, especially if you are looking forward to any big-budget purchase. It is how credit cards work. To easily get a credit card, you can apply with your existing bank. Make sure that you choose a regular credit card if you are new to your career. As you build your credit history and score, you can opt for premium credit cards that offer you higher limits and greater benefits.