How to get a credit card with a low CIBIL score?

How to get a credit card with a low CIBIL score?

A low CIBIL score can feel like a roadblock when you're trying to get approved for a new credit card. However, there are still options available if your credit is less than perfect. You need to be strategic with your credit card applications and focus on cards designed to help you rebuild your credit. You can increase your chances of approval even if your credit score is below 700 by following this advice.

What is a CIBIL score?

A CIBIL score is a three-digit number that represents a person's credit history and likelihood of repaying debts. CIBIL stands for Credit Information Bureau India Limited, which is India's largest credit information company. The CIBIL credit report and credit score are created by collecting data from banks and financial institutions.

The CIBIL score ranges from 300 to 900, with a higher score indicating a better credit profile. It is calculated based on five factors – payment history, credit utilisation ratio, length of credit history, types of credit in use, and the number of new credit accounts opened. Timely repayment of loans and credit cards has the biggest impact on one's CIBIL score. Multiple loan inquiries defaults on payments, high credit card balances, etc., can lower the CIBIL score.

How does a CIBIL score impact credit card eligibility?

A higher CIBIL score indicates a positive credit history and lower risk for lenders. Individuals with a score above 750 have the highest approval odds and can get credit cards from most banks. A score between 700-750 is considered favorable

and approval is likely from most banks. Applicants with a CIBIL score between 650-700 may get approved for cards with lower credit limits or secured cards that require a fixed deposit. A score below 650 indicates high risk and credit card rejection is likely at most banks. Those with a very low score below 550 will struggle to get approved for any credit card.

Besides the score, other factors like income stability, existing loans, occupation, city of residence, and relationship with the bank also play a role in credit card eligibility. However, the CIBIL score sets the base criteria. Ensuring timely repayments, keeping credit utilisation low, and having a long credit history help build a strong CIBIL score over time. This increases approval chances for new credit cards and ensures access to higher credit limits on existing cards.

Can you get a credit card with a low CIBIL score?

Below are some ways people with low credit scores can still get approved for a credit card.

Secured credit cards

Secured credit cards require an upfront deposit as collateral against the credit limit. The credit limit offered is usually equal to or higher than the deposit value. IDFC FIRST Bank offers a secured credit card called FIRST WOW! It requires no income proof, documentation, or credit history, making it accessible even for those with low or no credit scores. The card can be availed against a fixed deposit, with FD returns up to 7.5% p.a., providing an option for retirees or non-salaried individuals to get a credit card despite low CIBIL scores.

Co-signed credit cards

Adding a person with a good credit score as a co-signer or guarantor can help get approval despite a low personal credit score. The co-signer becomes equally liable for repayments.

Credit builder cards

Some banks offer credit builder cards with low credit limits specifically for improving credit scores. These help establish a credit history when used responsibly.

Salary accounts

Applying for a credit card where an individual’s salary account is maintained can make it easier to get a credit card. Banks may be more flexible with existing customers who have a regular salary being credited to their accounts.

While it is possible to get approved for credit cards even with a low CIBIL score through strategic applications, one should also assess why their score is low in the first place. Defaults, missed payments, high utilisation, etc., can cause a drop in the CIBIL score. Identifying the root cause and taking corrective action to improve credit health is crucial.