You have probably witnessed a friend or co-worker get an airline ticket nearly free of cost by redeeming their credit card rewards. And most of us have at least known someone who has used their credit card membership points to buy a home appliance from a good brand but without having to spend a rupee to do so. At that point, many of us might have wondered, "how can I get the credit card that allows me to enjoy such benefits?" And how do you proceed to actually get a pre-approved card?
Develop a credit history
The bank will first ask itself if you can settle your debts, and do so on time. The only way for the bank to evaluate whether you will indeed make good on the credit extended to you is to look at your track record, or in other words, your credit history. All the loans you have taken, all the credit cards you have ever had, and any payments one might have defaulted on are included in your credit history.
What happens if you have never taken a loan and have never had a credit card? That makes it difficult to judge, but you might still get a pre-approved credit card offer based on points 3 and 4 on this list.
Maintain a good credit score
Interchangeably referred to as CIBIL score, your credit score gives the bank a snapshot of whether you’ve settled prior debts in a timely fashion. Those looking to apply for a credit card must try to maintain a CIBIL score of 650+ in order to come across as diligent borrowers. For some cards that come with high credit limits, and a buffet of benefits, you might even need a credit score of 750.
Deposit your income in the same account monthly
Banks and other lenders, like Non-Banking Finance Corporations (NBFCs), will usually send out mailers offering pre-approved credit cards to a database of customers who show a stable income. The minimum cut-off is Rs. 25,000 per month. In case you do not have a salary account, and you receive your income by cash or cheque, you might be depositing your income in various bank accounts. However, in such a situation, you will not turn up on the bank or NBFC's radar as a customer who is eligible for a pre-approved credit card. Do your best to turn up on the said radar by making regular income deposits in excess of Rs. 25,000 per month.
Ensure a balanced DTI ratio
Since the lender wants to be sure that you'll be able to pay them back, they will look at your monthly expenses, to see how much you're usually left with at the end of the month. The idea is to decide if you'll have any funds left to pay your credit card bills. Your DTI ratio, that is your debt to income ratio tells the credit card company about your attitude and habits with relation to spending. Curb your expenses to about 40% of your monthly income, in order to get a pre-approved credit card offer.
Use a related product
Responsible behavior with a related product bolsters the bank's confidence in a credit card applicant. For example, users of the Bajaj Finserv EMI Network Card are more likely to get a pre-approved Bajaj Finserv RBL Bank SuperCard. You are always more likely to obtain a credit card from a bank or NBFC that you are already associated with.
Be aware, however, that getting a pre-approved credit card is no 100% guarantee that your application will actually go through. After pre-approval, a thorough check of finances is conducted. It is important to inculcate financial discipline, especially if you plan to own a credit card. It becomes imperative that you are financially prudent, and pay your dues on time every month.
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