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Last Updated : Jul 12, 2019 05:56 PM IST | Source:

Best credit cards for bad credit

Credit Cards For Bad Credit: Have a bad credit? You can still avail a credit card and improve your CIBIL Score. Click here & know how to get a credit card if you have bad credit.

Moneycontrol News @moneycontrolcom

With bad credit, you can still avail a credit card and improve your CIBIL Score. Credit cards have become an integral part of our everyday lives. We swipe the card for flight tickets, petrol, online and offline shopping, and even use them internationally (in case of an international card). However, an individual is eligible for a credit card only if s/he meets certain guidelines. One of these guidelines includes a credit score or CIBIL score of anything between 750 and 900 (A CIBIL score is between 300 and 900). Your credit score is calculated basis the regularity by which you pay your credit card bills, or monthly EMIs. If you delay paying these bills, your credit score automatically falls. The closer your CIBIL score is to 900, greater the chance of being eligible for a credit card.


What is CIBIL Score?

The CIBIL score is a three-digit number that highlights your credit history. Your CIBIL score is calculated based on whether you pay your credit card bills on time, whether you pay your loans on time, and whether you have defaulted or delayed paying either. A CIBIL score ranges between 300 and 900, and the higher your score is, the better is your chance of getting a loan or a credit card. The closers your score is to 300, the greater your chance of getting a credit card or loan rejection. However, there are ways to improve your CIBIL score. These include getting a secure credit card, increasing your credit limit, keeping an eye on your credit utilisation ratio, and paying your EMIs on time.


Importance of CIBIL Score

Most banks and financial institutions check your CIBIL score to see if you can pay your credit card bill on time. They also check the CIBIL score in case you apply for a loan such as a home loan, an auto loan, or a personal loan. A delay in payment results in a default, and in the long-run, a loss for the bank. Hence when an individual applies for a credit card, s/he is required to submit all documentation, including their salary slip, bank statement, Form 16, and income tax certificate. If the individual already has a credit card, then s/he is required to provide the details of the card to the bank providing the new credit card. Basis these documents, the bank checks your history and calculates your credit score, and deems whether you are eligible for a credit card.


How do you get a credit card with a poor CIBIL score?

Certain banks offer cards to individuals with a poor credit score. However, there are several terms and conditions involved in this. If you still wish to opt for a credit card, you need to check the following with the bank:

Ask for a secured credit card: One of the easiest ways to get a credit card in case of a poor CIBIL score. A secured card is used to also build up the individual’s credit score. If you are in need of a credit card and have a poor credit score, all you need to do is open a fixed deposit with the bank you wish to get a credit card from and make a deposit. The bank will issue the card with a credit limit of up to 100 per cent of the deposit. However, some banks also give a credit limit of up to 50 per cent of the deposit, and this depends on the bank from where you apply for a card.

Use an add-on card: An add-on credit card is availed by an individual who is the primary credit card holder in the family. The add-on cards come with similar benefits as the original credit card, with the only difference being a reduced credit limit. This is because the credit limit on the primary card is also shared in the add-on card i.e. if your credit card has a limit of Rs 1 lakh, and you avail an add-on card, then the credit limit will be divided between both cards. Add-on cards can be used to improve an individual’s credit score.


Credit card against savings account:

Certain credit cards are offered against an individual's saving account, but this is provided by very few banks. The individual will have to put a certain amount in his/her savings account, basis which the bank will provide a credit card. This way, a CIBIL score is not calculated, but the bank knows that you will be able to pay off the monthly amount by checking your account.

Get a prepaid credit card: Instead of getting a regular card, banks also offer prepaid credit cards for individuals with a poor credit score.

If you do the following steps, chances of improving your CIBIL score is high, which eventually means you can avail a proper credit card. Remember, getting your CIBIL score to an acceptable level is the key.



How do I build my CIBIL score?

You can build your CIBIL score by paying your monthly credit card bills or EMIs on time. Do not delay payments. If you have a poor CIBIL score, then consider getting an add-on card, a prepaid card or a secured card and use it properly.

Does card usage affect CIBIL score?

Indeed. Every transaction you make on your card affects your CIBIL score. If you use your card well, then your CIBIL score goes up. If you manage it poorly, then your score plummets.

Can I pay my credit card using EMIs? Will this affect my CIBIL score?

No this will not affect your CIBIL score. However, do note that you have to pay your EMI on time, as it will impact your score.

How can I increase my credit card limit?

You can do this by using your credit card wisely. This means you pay the entire amount on time and don’t just pay the minimum amount. You can also increase the credit card limit by contacting your bank that has issued you the card.

Will getting my first credit card increase my CIBIL score?

It will, but you need to realise that your card has to be used wisely. In an ideal situation, use the card to 20% of your actual credit limit i.e. if you have a credit limit of Rs 1 lakh, don’t spend more than Rs 20,000 to Rs 30,000 per month with the card.
First Published on Jul 11, 2019 02:31 pm
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