Things to know before you submit your credit card application

Credit card application is reviewed and approved only if it meets the eligibility criteria. Before applying for the card, make sure you have a good CIBIL score. While many might tell you what to do before you apply for credit card, not many might tell you what you should not do before the process.

Each mistake you make before applying for the credit card might hamper your chances of approval to a large extent. Things to know before you submit your credit card application

Do not let your Credit Score dip: Credit card companies look at your credit score before approving your application, and it is crucial not to let your credit score dip before your start applying for one. Make sure you do not apply for too many credit cards at the same time, you pay up all your dues, and you check your credit score before applying for a Credit Card. A score of 750+ is considered safe.

Do not apply for a lot of Credit Cards and Loans at the same time.  It is a misconception that you can apply for 3-4 cards so that your application gets approved at least from one, alternatively too many credit card applications might get your application rejected. Lenders think you are not balancing the income to debt ratio and hence you are not credit worthy.

A credit utilization of 30% is considered optimum, anything above that is bad for your credit report. Make sure you only use that percentage of credit each month and make timely payments to maintain a good credit score. Using too many credit cards can put you in a negative spot.

Your payment history accounts for the maximum chunk of the credit score. One of my friends just missed his deadline by a few hours, and his credit score soared low. He learned the lesson the hard way, and he makes sure he makes his payments within a week of receiving his bill. Remember on time payments are most important factor in developing a good credit score.

Do not cancel your old accounts. Doing so will shorten the credit history on the report and can also lead to a reduction in the total available credit. Most of us are always tempted to close the old accounts for the simple reason that we are no longer using it, but doing so will have an effect on the credit score. So if you are planning to apply for a credit card immediately after closing an old account, you might want to rethink.

Before the application, checking the credit report for errors is mandatory. Two people can have the exact same name and sometimes lead to mistaken identity. My previous company used old software to record the details of the customers, while CIBIL score was compulsory to grant a loan. There were instances where the customer was mistaken for someone else with a bad credit history. We came to know about the same only when it was brought to our notice. He was being accused of fraud, while he was a prompt and vigilant payer.

If you have absolutely no credit history and you plan to apply for a credit card, think again. It is good to apply for small loans to build a credit history. Even using a credit card for paying small bills like electricity, water, grocery can build your credit history.

Never ever lie to the credit card company. Make sure you give the correct address for verification as physical verification is one of the important factors for Credit Card Application. Your application should be complete, and all mandatory fields filled correctly. Do not lie about the income, inflating the income for the credit card application may seem easy, but it is definitely not worth the risk. In fact, negative information can result in low credit score and a bad credit history. It is always advisable, to be honest, and accept the credit limit granted by the financial institution depending on your income and payment record.

Last but not the least read the terms and conditions, fees, and rewards. You should know what you are signing up for. Make sure you are aware of the interest rate and other details before you apply for the card. Read about their fees Annual fees, late payment fees, Foreign transaction fee, Cash advance fee, etc.

Remember the benefit of having a Credit card is building your credit and not harming it.