How to Get a Credit Card with a Low CIBIL Score

The CIBIL score is one of the most important criteria that banks and financial institutions consider before approving or rejecting a credit card application. However, it is now possible to obtain a credit card with a bad credit history too. Whether you're new to credit or rebuilding your financial standing, you can get access to credit cards regardless of your CIBIL score. 

Even individuals with less-than-ideal credit scores have options for obtaining a credit card.

1.Secured Credit Cards

Unlike traditional credit cards, secured credit cards require a security deposit, typically in the form of a fixed deposit (FD) or mutual funds. The credit limit is usually capped at a percentage of the deposited amount. Using a secured card responsibly and making timely payments can help you build a positive credit history and gradually improve your credit score.

2.Unsecured Credit Cards

These cards cater to individuals with lower credit scores or limited credit history. Compared to secured cards or those offered to individuals with good credit scores, unsecured cards for bad credit generally have significantly higher APRs, making borrowing more expensive. These cards might have annual fees, balance transfer fees, and other charges, further increasing the overall cost of using the card.

3.Student Credit Cards

Designed specifically for students with limited credit history, student credit cards often have lower credit limits and stricter eligibility criteria. However, they can be a good starting point for building credit responsibly.

4.Store-Specific Credit Cards

These cards, offered by various retail chains and partnered banks, provide rewards and discounts on purchases made at specific stores. However, these might have limited usage outside those stores.

• Focus on Low Annual Fees: While some unsecured cards specifically cater to individuals with bad credit might have annual fees, compare options and choose cards with lower or waived annual fees to minimise the overall cost.

• Consider Rewards Programs: While not all cards in this category offer reward programs, some might provide cashback or points on purchases. If you plan to use the card regularly, opting for a card with a rewards program can offer some benefits.

• Read the Fine Print: Before applying for any credit card, thoroughly read the terms and conditions, including interest rates, fees, late payment charges, and other relevant details, to avoid any surprises later.

Obtaining a credit card with bad credit is merely the first step. Responsible management is crucial to improve your credit score in the long run and avoid additional financial complications. Here are some key strategies to consider:

• Make Consistent On-time Payments: This is the single most critical factor influencing your credit score. Consistent on-time payments demonstrate your commitment to fulfilling financial obligations and significantly improve your creditworthiness. Even a single missed payment can negatively impact your score.

• Keep a Low Credit Utilisation Ratio: The credit utilisation ratio refers to the percentage of your credit limit utilised. Ideally, aim to keep this ratio below 30%. Utilising a limited portion of your credit shows lenders you can manage credit responsibly and helps maintain a good credit score.

• Avoid Frequent Applications for New Credit: Applying for multiple credit cards in a short period can negatively impact your credit score due to "hard inquiries" from credit bureaus. These inquiries remain on your credit report for a specific period and can temporarily lower your score. Avoid unnecessary applications and focus on managing your existing credit responsibly.

• Monitor Your Credit Report Regularly: Regularly review your credit report for any errors or discrepancies. Identifying and addressing them promptly, such as reporting incorrect information or late payments that were made, can prevent inaccuracies from affecting your credit score negatively. You can access your credit report for free once a year from each credit bureau operating in India (CIBIL, Experian, Equifax, etc.).