Credit scores seem to be slowly becoming the deciding factor behind who gets cheaper credit cards and who ends up paying steeper interest, as banks and financial institutions increasingly lean on data-driven evaluations. The trend, industry watchers suggest, may only grow stronger in the coming months.
India’s major credit bureaus — CIBIL, CRIF High Mark, Equifax and Experian — track every borrower’s financial behaviour and assign a score between 300 and 900. Anything above 750 is generally seen as healthy, while scores below 650 indicate poor money management and higher chances of default.
Lenders appear to be linking credit card interest rates — often in the range of 30-42% a year — to these scores. The goal, according to industry discussions, is to make lending decisions more predictable and risk-based.
A score over 750 signals low lending risk and strong repayment potential, giving lenders more comfort. Those between 650 and 749 fall into the “moderate” bucket, hinting at occasional delays or high credit use. A score under 650 is usually treated as a warning sign, suggesting possible repayment issues.
This risk perception inevitably trickles down into interest rates, credit limits and even the kind of credit cards customers qualify for.
People with strong credit scores may find themselves eligible for lower finance charges on their credit cards. Since revolving credit can get expensive quickly, even a small reduction in interest could ease the burden.
Banks also tend to offer higher credit limits to users they view as low risk. This can help keep the credit utilisation ratio under control — a factor that itself influences future credit scores.
Premium cards with travel rewards, insurance and airport benefits mostly go to applicants with impeccable profiles and scores above 750. Faster approvals, minimal documentation and occasional balance transfer offers at low or zero interest also seem to favour high-score customers.
Industry officials point out that basic habits play a huge role in maintaining a supportive credit score. Paying credit card bills in full, keeping credit utilisation under 30%, avoiding too many loan applications at once, and reporting errors in credit reports promptly can help keep borrowing costs predictable.
Even as credit cards become more accessible, financial advisers stress that the risks remain the same. High-interest debt, overspending, score damage due to missed payments and fraud continue to be real concerns. Those planning to apply for a new card may need to weigh these risks before signing up.
