A credit card is an extremely useful financial tool that can increase your spending power and help you better manage your purchasing habits. It also helps you maintain a healthy credit score in case you wish to get a loan in the future.
As useful as it is, not everyone can avail of a credit card because there are some eligibility criteria in place for getting a credit card.
Why is it important to check your eligibility for a credit card? Because it helps banks understand whether you will be able to pay your credit card bills. But knowing your eligibility status also helps you get a sense of your own credit profile so that you don’t waste your time filing a credit card application that won’t go anywhere.
There are two basic aspects that affect credit card eligibility. These are –
- The factors actually affecting whether or not you make the cut to apply for a credit card
- The documents required to get a credit card
In this blog, we shed light on both these aspects.
Factors affecting credit card eligibility
- Age: Credit cards are only given out to people who are at least 18 years of age. For some banks, the minimum age for getting a credit card is 21 years. Some lenders also have a cap on the maximum age at which one can apply for a credit card, which is often 60 years.
- Income: Your income affects your repayment ability. This is why banks only give cards to people with a minimum salary of around Rs 3 lakh per annum. This number may differ for different banks’ eligibility criteria.
- Nationality: Usually, all residents, citizens, and non-residents can apply for a credit card. However, it depends on the type of credit card you are applying for.
- Credit score: Lenders run a check on your credit score before giving you a loan. The higher the credit score, the better your chances of getting a credit card. A score between 750 and 900 is considered to be good.
- Employment status: Longer association of employment with a particular workplace increases your chances of getting a loan. Applicants who keep switching jobs, on the other hand, may not be as preferred by banks as those who have a history of steady income from a dependable employer.
- Location: The area of residence also impacts your eligibility for a credit card. There are a variety of credit cards on the market, and some credit them are reserved only for people living in certain cities.
Documents required to get a credit card
You must be in possession of a certain set of documents to be able to apply for a credit card. These give banks proof of your cash flows, your identity proof, and proof of residence. Most banks will require you to present these documents at the time of application. Here’s a list –
For salaried employees, these are the documents required:
- Bank statements
- Salary slips
- Identity proofs
- Completed application form
- Passport-sized photos
- Residence proof
- Form 16
For self-employed people, here’s a list of the required documents:
- Statement of accounts
- Income proof
- Proof of business
Fees and charges
There are several fees and charges that a credit card holder is required to pay. Only if they are ready to pay these charges, they should apply for a credit card.
While this does not relate to their eligibility directly, it gives potential applicants a better idea about the future costs of holding a credit card. Here are the charges and fees that a credit card holder incurs –
- Cash advance fees: When one withdraws money from their credit card in an ATM, they are charged 2% to 3.5% of the withdrawn amount.
- Annual membership fees: Annual membership fees are an annual charge that credit card holders must pay for holding a primary card or an add-on card. These charges vary across banks and are non-refundable.
- Late payment charges: Late payment charges are levied if the cardholder does not pay the minimum amount due on the due date. Such a fee differs for different banks, but is often Rs 100 to Rs 750, depending on the outstanding balance.
Also Read: The Best Online Tools for Payroll Management
A credit card is an excellent way to manage finances while also maintaining a good credit score. However, before one applies for a credit card, one must be sure of their repayment ability.
Checking your eligibility for credit well in advance ensures the bank that you will be able to repay the amount.
It also helps you understand your own repayment ability and whether getting a credit card is right for you.
This is exactly what banks’ comprehensive credit card eligibility checks ensure so that you never miss paying off your credit card bill.