Today, several banks are available that help you to fulfill your dreams. Availing loans such as home loans, personal loans, etc., are the common goals in the ambitions of most people.
People are now turning to use credit cards for shopping and immediate expenses, which is nothing but the term of the loan itself. Applying for a credit card and a loan together is a great solution to meet financial expenses.
Is it possible to apply for a credit card and loan at the same time?
In this article, we tell you how the functions it works when the credit card and the loan are applied at the same time.
How do the banks decide the Loan disbursement?
Banks follow the simple logic that the loan value does not exceed the borrower’s repayment capacity. For this purpose, the banks refer to several pieces of information about the borrower.
The creditworthiness of the loan applicant
Creditworthiness is available in the CIBIL credit history, represented by the credit score and the credit information report. The credit score is based on factors such as payment history, credit history, etc.
Loan and credit card issuers determine the number and amount of the existing loan outflows that the individual has. If the person is observed servicing- in the various loan outflows, then there is a high chance that the bank will reject your credit card and loan request.,
Borrowers who have a history of various balance transfers on previous credit cards and loans face difficulty in avail of the credit.
Number of inquires
When the bank receives the loan and credit card application, it goes like an inquiry into the borrower’s credit history. The higher the number of inquiries, the lower the chances of getting the credit.
Any other factors
Income level and age are the other factors that prevent banks from issuing credit cards or loans.
Impact of applying for credit cards and loans together
- Every time the banks receive the loan and the new credit card application, it makes the inquiry and goes into the borrower’s credit score.
- It means that the application for a credit card and loan at the same time will raise the two inquiries.
- A maximum number of inquiries indicate that the borrower is in high need of a credit amount.
- This is not considered a good sign from the lender’s side and makes the banks reject the credit card and loan application.
- In fact, the higher the number of inquiries, the bigger the drop in the credit score of the borrower.
It is concluded that it is possible to apply for a credit card and loan together, but it is not a good idea. A good way is to apply for the one alternative only, pay off the debt installation regularly and then apply for the other alternatives.
So, while it is possible to apply for a credit card and loan at the same time, it is not recommended.