A credit score is a three-digit number the credit rating bureaus assign depending on your previous activities as a borrower. This score ranges from 300 to 900, where 300 being the lowest and 900 being the highest. Since credit scores summarise your creditworthiness, they play a significant role in helping financial institutions decide whether you are a reliable borrower.

This score also plays a crucial role in determining your eligibility for instant credit cards. These payment cards are beneficial in emergencies as they are readily available, and you can utilise their benefits to your advantage.

So, if you are unsure about the significance of credit score in the approval of instant approval credit cards, read on to learn more.

Understanding Credit Scores

Definition and components of credit scores

A credit card is a three-digit number representing your status as a borrower. The score assigned to you shows the lenders how you have performed as a borrower over the years. But how does it work? Well, the credit rating agencies in charge of assigning this score analyse your repayment behaviour, the credit mix on your portfolio and a few other factors to get to this score.

Credit score ranges and their implications.

The credit score ranges from 300 to 900, where 300 is poor, and 900 is considered excellent. The significant implications of not managing this score or managing it well are visible during your loan application. You can negotiate better loan terms and vice versa if you boast an excellent score.

Factors that influence credit scores

Now, the question is, what affects this score? Well, there are a few things, and the list includes not paying the bills on time, keeping the credit utilisation ratio high, and applying for multiple credit cards or loans at once.

Instant Credit Card Approvals

Definition and benefits of instant credit card approvals

Instant credit card is a type of credit card that is approved quickly; hence, they are ideal for situations when you need access to this payment card immediately. The biggest benefit of this payment card is that you don’t need to wait a long time to get approval, and you can access its benefits almost immediately.

However, that does not mean it compromises on standard credit card benefits, including regular offers, reward points, welcome bonuses, etc. However, some features, like airport lounge access, may only be part of premium credit cards.

Credit score requirements for instant approvals

Excellent credit scores (750 and above): A credit score like this represents that you have managed your finances excellently. 

Good credit scores (670-749): A good credit score means you are doing a good job at managing your credit.

Fair credit scores (580-669): A credit score in this range suggests that your efforts have been decent, but there is a lot of room to improve.

Poor credit scores (below 580): This means you have somewhat failed to manage your credit and made some bad decisions. You need to take immediate actions to recover from this.

Importance of credit history and other factors in instant approvals

Your credit history is pivotal in determining your approval for an instant credit card. Since it summarises your status as a borrower, the credit card issuer will use this as a reference point to gauge whether you are the right person to lend to.

Apart from your credit history, factors like repayment record, current debt-to-income ratio, monthly income, etc., also play a vital role in the approval of your credit card application.

Credit Score Requirements by Card Type

Rewards credit cards: Typically, the minimum credit score required to secure a standard reward card can range between 670 and 750. However, the particulars will change as per the selection of a credit card issuer. So, you need to review the criteria and then apply.

Apart from a decent credit score, you must maintain a low debt-to-income ratio and have the repayment capacity to access premium credit cards.

Balance transfer credit cards: Typically, balance transfer credit cards also ask for a credit score as the regular rewards cards. Since the idea here is to help you manage your debt, these credit cards focus on your monthly income, which is somewhat non-negotiable. So, you need to ensure you meet this pointer without fail. 

Student credit cards: Student credit cards are usually issued against a primary credit card held by the parents. So, there are no credit score requirements as such. However, suppose someone over the minimum qualification age applies for a credit card. In that case, they will be treated as a principal credit card user, not a student card holder.

Alternative Options for Lower Credit Scores

Nevertheless, you still have some options even if you do not have the credit score needed to secure approval for premium cards.

Subprime credit cards: Subprime credit cards are the ones that offer the standard benefits of the payment card but maybe against not-so-favourable terms. To elaborate, the credit card issuer may impose higher annual charges, late payment fees and interest rates on such credit cards. Also, the rewards may not be outstanding and may not bring premium benefits.

The credit score required for these credit cards is usually between 580 to 650.

Secured credit cards as a rebuilding tool: The other and probably the most prominent option is a secured credit card. Available against collateral, preferably an FD, these payment cards let you enjoy the benefits of a credit card. The most significant advantage of this credit card is that it is an effective and proven tool for rebuilding your credit score.

Usually, there are not many prerequisites you have to meet to get this card. You only need a fixed deposit and a good enough monthly income to access this payment card. The credit score is not a consideration here.

Strategies for Improving Credit Scores

With all the options out of the way, let’s focus on improving the credit score, as it benefits by overreaching the need for approval for a credit card. So, here are some strategies to help you do it.

Paying bills on time and in full: Repaying your dues on time and in full is the best strategy to improve your credit score. Once you clear your dues on time, it will automatically increase your credit score and improve your credit profile.

Reducing credit card balances: Lowering the balance of your existing credit card is another way to better your credit score. When you keep your credit utilisation ratio low, it projects you as a responsible borrower.

Building a positive credit history: The other point is creating a positive credit history. You can do this by managing your credit utilisation ratio, paying bills on time, and keeping a good mix of secured and unsecured loans in your portfolio.

Limiting new credit applications: Last but least, refraining from making multiple credit applications is another way to improve your credit score.

Conclusion

 

To sum up, you must maintain a good credit score of over 700 to access an instant approval credit card without hassle. Since credit score plays a pivotal role in determining your approval of a credit card, you must be diligent here and manage it properly. In this regard, you can take assistance from the points mentioned in this article and get the credit card you want.