Credit cards have become a crucial part of our daily lives, and they offer many benefits such as cashback, reward points, and easy financing options. However, many people are unaware of how their credit card usage can impact their CIBIL score.
CIBIL, short for Credit Information Bureau (India) Limited, is a credit information company that maintains records of an individual’s credit history and provides credit scores to banks and other financial institutions. A good CIBIL score is essential for availing loans and credit cards from banks, and it can also impact your chances of getting a job or renting a house.
The CIBIL score ranges from 300 to 900, and a score of 750 or above is considered good. A low score can make it difficult to get a loan or credit card, and it can also attract higher interest rates.
So, how does credit card usage impact your CIBIL score?
Payment history: One of the most important factors that determine your CIBIL score is your payment history. Banks and other financial institutions check whether you have made your credit card payments on time or not. Late payments can have a severe impact on your CIBIL score, and it can remain on your credit report for up to seven years. Therefore, it is crucial to make your credit card payments on time and avoid late payments as much as possible.
Outstanding balance: Another important factor that affects your CIBIL score is your outstanding balance. A high outstanding balance on your credit card can indicate that you are over-extending yourself financially and may have difficulty paying off your debts. Therefore, it is crucial to maintain a low outstanding balance on your credit card and keep it within 30% of your credit limit.
Number of credit cards: Having too many credit cards can also affect your CIBIL score. It can indicate that you are applying for too many credit cards at the same time and may have difficulty paying off your debts. Therefore, it is crucial to have only the number of credit cards that you need and can manage responsibly.
Now let’s look at some of the top banks in India and their policies related to credit cards and CIBIL scores:
HDFC Bank: HDFC Bank is one of the most popular banks in India and offers a wide range of credit cards. The bank has a strict policy when it comes to CIBIL scores, and it generally requires a score of 750 or above for availing a credit card. The bank also checks the applicant’s income and employment status before approving a credit card.
SBI Bank: State Bank of India (SBI) is the largest public sector bank in India and offers a wide range of credit cards. The bank has a relatively lenient policy when it comes to CIBIL scores, and it generally requires a score of 600 or above for availing a credit card. However, the bank also checks the applicant’s income and employment status before approving a credit card.
ICICI Bank: ICICI Bank is one of the largest private sector banks in India and offers a wide range of credit cards. The bank has a strict policy when it comes to CIBIL scores, and it generally requires a score of 750 or above for availing a credit card. The bank also checks the applicant’s income and employment status before approving a credit card.
Axis Bank: Axis Bank is one of the third largest private sector banks in India and offers a wide range of credit cards. The bank has a strict policy when it comes to CIBIL scores, and it generally requires a score of 750 or above for availing a credit card. The bank also checks the applicant’s income and employment status before approving a credit card.
