Economy

What is an Eligibility Check?

Your credit card application is hugely affected by it, but what is eligibility check? Read this article and find out.

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When applying for a credit card, you’re going to undergo an eligibility check, so find out what it is in this article

what is an Eligibility Check
Learn more about eligibility checks and see how to apply for a credit card. Source: Canva.

Ever asked yourself the question: what is an eligibility check? When it comes to obtaining a credit card, it is essential to meet the eligibility criteria of the credit card issuer. 

The eligibility criteria vary depending on the card you are applying for. But failing to meet these requirements could result in the rejection of your application. It could also potentially affect your credit score. 

Thus, it is critical to verify the eligibility criteria before applying for a credit card. To qualify for a credit card, there are several basic eligibility requirements that you must meet. 

The first criterion is age, as you must be at least 18 years old in order for the bank to consider you for a credit card. 

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The second requirement is a steady income source, which demonstrates your ability to make payments on your credit card balance. 

A positive credit history is also important, indicating that you have responsibly managed credit in the past.

In addition to these basic requirements, credit card issuers may have additional criteria. They include a minimum credit score, residence status, or employment history. 

It is important to carefully review these requirements before applying. That will ensure that you meet all of the criteria and increase your chances of approval.

But let’s dig deeper and talk about this in further detail.

What Elements Go into an Eligibility Check?

Several varying factors determine your eligibility for a credit card, and they depend on the card issuer. To ensure that you meet the eligibility requirements, it is essential to be aware of the primary factors issuers can take into account. Here are the details regarding these factors:

Your Credit Score

what is an Eligibility Check
Many factors can impact your chances of being approved for a new credit card. Source: Canva.

Part of what is eligibility check, is checking your credit score. When you apply for a credit card, the card issuer typically evaluates your credit score. 

Several factors influence this score. Some of these factors are your credit history, payment history, and any payment defaults. 

Generally, card issuers prefer to grant credit cards to individuals with a high credit score, preferably above 750.

Despite this, there are entry-level credit cards available in the market that cater to individuals with no credit history. 

These credit cards are specifically designed to provide a starting point for individuals who are new to the credit system.

Your Employment Situation

When it comes to credit card eligibility, your employment status at an organization plays a crucial role. 

If you have been working for your current employer or organization for more than a year, this demonstrates stability and credibility. This increases your chances of getting approval for a credit card.

However, if you have switched jobs multiple times within a short period, this may indicate a lack of reliability. Consequently, this could negatively affect your chances of getting approval. 

It is essential to have a consistent and stable employment history to increase your chances of being granted a credit card.

Your Credit Utilization

Your Credit Utilization Ratio (CUR) is the proportion of the credit limit you have utilized relative to the overall credit limit available to you. This indicates how much of your available credit limit you are using.

Maintaining a low CUR is advisable, as a high CUR may suggest that you are overly reliant on credit. 

Maxing out your credit limit is also not recommended, as it can negatively impact your chances of being approved for a credit card. 

Therefore, it is crucial to keep your CUR as low as possible to increase your chances of getting the credit card you want.

Your Credit Inquiries

When applying for a loan or credit card, the lender typically requests a copy of your credit report from a credit bureau. 

We refer to these requests as “hard inquiries,”. Submitting multiple hard inquiries within a short period can negatively impact your credit score.

To maintain a healthy credit score, it is crucial to avoid multiple hard inquiries and explore various options when applying for a credit card or loan. 

It is highly advisable to maintain a gap of at least six months before applying for another credit card or loan. This gives your credit score sufficient time to recover from the previous inquiry. 

By managing your credit report inquiries, you can increase your chances of getting approval while also maintaining a strong credit score.

Understanding What is Eligibility Check and its Limitations

what is an Eligibility Check
The eligibility check can prevent you from getting a new financial product. Source: Canva.

When it comes to obtaining a credit card, there are several factors to consider that can affect your eligibility and credit limit. 

The minimum salary requirement for a credit card varies from one issuer to another. It also depends on whether the primary applicant is salaried or self-employed. 

You don’t have to be a customer of the bank to apply for a credit card. However, you must provide proof of a stable income and a good credit score to be approved.

Also, to apply for a credit card, you will need to submit proof of income. They can be salary slips or tax returns, to verify your employment status. 

Once you receive approval, it may take up to 7 days to process your application. The issuer must also verify documents before issuing the credit card within 10 working days. 

The credit limit on your credit card is based primarily on your income, but other factors can influence that. For example, your debts, payment history, and credit history. 

Also, you can increase your credit card limit over time. As your income and creditworthiness improve you can request an increase, although subject to the issuer’s eligibility criteria.

Factors such as income, age, employment type, credit history, and debts play a crucial role in determining your credit limit. 

By understanding these factors and maintaining a responsible financial record, you can increase your chances of obtaining a credit card that meets your financial needs.

And if you’d like to work on your credit score to improve your chances of being approved in any eligibility check, read the following content and learn more about it!

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About the author  /  Danilo Pereira

Danilo is a copywriter with a passion for learning. Deeply interested in philosophy, politics and arts.

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