In today’s financial landscape, credit cards have become an essential tool for managing expenses, earning rewards, and building credit. But if you have a low CIBIL score, it can feel like getting a credit card is nearly impossible. The good news? You can still get a credit card for low CIBIL score, and in this blog, I’ll guide you through how to do just that.
What is CIBIL Score?
CIBIL score is a 3-digit number that reflects your creditworthiness, ranging between 300 to 900. A higher score indicates better credit health and a greater likelihood of getting credit approvals. The score is derived from your credit history, including loan repayments, credit utilization, and more.
Why CIBIL Score is Important for Credit Card Approval?
Banks and financial institutions use your CIBIL score to assess whether you are likely to repay the borrowed money. If your score is good (typically 750 and above), getting a credit card is much easier. However, a low score can make things challenging, but not impossible!
Understanding Low CIBIL Score
What is Considered a Low CIBIL Score?
A CIBIL score below 600 is typically considered low. This could be due to missed payments, high credit utilization, or too many loan applications.
Reasons for a Low CIBIL Score
Here are some common reasons why your score might be low:
- Late or missed payments
- Defaulting on loans
- High credit utilization ratio (using too much of your available credit)
- Frequent loan or credit card inquiries
- Not having a diverse credit portfolio
Impact of a Low CIBIL Score on Credit Card Applications
Why Low CIBIL Scores Get Rejected?
Banks see applicants with low CIBIL scores as “risky.” A low score indicates past financial mismanagement, so banks are hesitant to approve credit cards or loans without higher assurances.
Can You Still Get a Credit Card with a Low CIBIL Score?
Yes! Though it’s harder, you can still find credit cards for bad credit. There are credit cards specifically designed for those with a low CIBIL score, and I’ll share some top options later.
How to Get a Credit Card for Low CIBIL Score?
Credit Cards Designed for Low CIBIL Score
Some banks and NBFCs offer products like secured credit cards that allow you to use a credit card even with a poor credit history.
Benefits of Credit Cards for Bad Credit
- Helps rebuild your credit score
- Provides credit limit to manage emergencies
- Earn rewards and cashback just like regular credit cards
Types of Credit Cards for Low CIBIL Score
Secured Credit Cards
Secured credit cards are backed by a fixed deposit. Your FD acts as collateral for the credit limit. One good example is the SBI Unnati Credit Card.
Prepaid Credit Cards
These are reloaded with money before you can use them. Though they don’t improve your credit score directly, they can still help with managing expenses.
Credit Cards from Small Banks or NBFCs
Small financial institutions often have more flexible requirements than big banks and may offer credit cards for bad credit.
How Secured Credit Cards Can Help Improve Your CIBIL Score?
What is a Secured Credit Card?
A secured credit card requires a security deposit (typically through an FD). This reduces the risk for the bank and helps you get a credit card despite your low score.
How Do Secured Cards Work?
You deposit an amount (say ₹10,000), and based on this, the bank issues you a credit card with a similar credit limit. As you repay your dues on time, it improves your CIBIL score over time.
Best Credit Cards for Low CIBIL Score in India
Here are some of the best credit cards for low CIBIL score:
- SBI Unnati Credit Card: Available against a fixed deposit of ₹25,000 or more.
- ICICI Bank Instant Platinum Card: Comes with no annual fees and is issued against an FD.
- Axis Bank Insta Easy Credit Card: Available against a fixed deposit and helps build credit quickly.
How to Apply for Credit Cards with a Low CIBIL Score?
Documents Required
- ID Proof (Aadhar, PAN)
- Address Proof
- Income Proof
- Fixed Deposit (for secured credit cards)
Step-by-Step Application Process
- Select a bank offering secured credit cards.
- Deposit the required amount in FD.
- Apply for the secured card using the FD as collateral.
- Submit the necessary documents.
- Get approval and start using your card responsibly.
Tips to Improve Your CIBIL Score
- Timely Repayment: Pay your credit card bills before the due date.
- Keep Credit Utilization Low: Aim to use less than 30% of your credit limit.
- Avoid Multiple Loan Enquiries: Too many applications can harm your score.
Common Myths about Low CIBIL Score and Credit Cards
Myth 1: You Can’t Get a Credit Card with a Low CIBIL Score
Secured credit cards and certain prepaid cards are designed exactly for people with low credit scores.
Myth 2: Secured Credit Cards Are Not Helpful
Secured credit cards are one of the best ways to rebuild your credit score since they report to the credit bureau.
Importance of Choosing the Right Credit Card for Low CIBIL Score
When you’re dealing with a low credit score, it’s crucial to compare credit cards carefully. Consider fees, interest rates, and other charges.
Mistakes to Avoid When Applying for Credit Cards with a Low CIBIL Score
- Applying for Multiple Cards at Once: Each application leads to a hard inquiry, which can further lower your score.
- Ignoring Terms and Conditions: Be sure to read the fine print to avoid hidden fees and penalties.
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Can a Credit Card Actually Help Improve Your CIBIL Score?
Yes! By using a credit card responsibly, you can build a positive credit history. Timely payments and low credit utilization will gradually improve your score.
Conclusion
A credit card for low CIBIL score can be a game-changer if used wisely. While it might be challenging at first, there are several options available. Focus on using your credit responsibly, paying your bills on time, and soon you’ll see your CIBIL score improving. Finance m updated rhnae k lea finanebabu koh follow krea.
FAQs Credit Card for Low CIBIL Score: A Complete Guide for 2024
- What is the minimum CIBIL score required for a credit card?
While most banks prefer a score of 750+, secured credit cards can be issued with scores as low as 300. - How long does it take to improve a low CIBIL score?
It can take 6 months to a year, depending on your financial habits. - Can a secured credit card increase my CIBIL score?
Yes, regular and timely payments on a secured credit card help improve your score. - What are the best credit cards for low CIBIL score in India?
SBI Unnati, ICICI Instant Platinum, and Axis Insta Easy are great options. - Will applying for a credit card hurt my CIBIL score further?
Multiple applications can reduce your score. However, applying for one secured card won’t hurt your score much.
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