Before we going into the types of credit cards available for people with bad credit scores, let's first understand what is considered a bad CIBIL score.
CIBIL Score Range: A CIBIL score ranges from 300 to 900, with 900 being the highest.
750 and above: Excellent
700-750: Good
600-700: Fair
300-600: Poor or Bad
A CIBIL score below 600 is seen as a bad score. This can happen if you miss payments, default on loans, or have too many loans or credit cards that you don’t manage well. A low CIBIL score makes it harder to get loans or credit cards from banks, but there are options available for people with poor credit.
Secured credit cards are a good option for people with a low CIBIL score. These cards are linked to a fixed deposit (FD) that you make. Since the bank has your FD as security, they are more willing to give you credit, no matter your credit score.
Your credit limit is usually about 80% to 90% of your FD amount.
You must keep the FD for as long as you have the card.
The FD protects the bank if you don’t make your payments.
Easier Approval: Because you have an FD, it’s easier to get approved.
Credit Score Improvement: Making payments on time can help raise your CIBIL score.
No Income Proof Required: Many banks don’t ask for income proof for these cards.
Important: Always pay your secured credit card on time to help improve your CIBIL score.
Lower Credit Limit: Your credit limit depends on your FD amount.
Funds Locked in FD: You can’t take out the FD money until the card period is over or the FD matures.
Prepaid credit cards, also called reloadable cards, let you add money to the card before you shop. They don’t give you credit, but they are a good option if you want the ease of a credit card without needing approval.
You can use the prepaid card only up to the amount you’ve loaded onto it, so you can’t overspend or go into debt. Since it’s not a real credit card, your credit score doesn’t matter when you get one.
No Credit Check: Anyone can get these cards, no matter their CIBIL score.
No Debt Risk: You can’t spend more than what’s loaded on the card, helping you manage your money better.
Widespread Acceptance: You can use these cards like regular credit cards, even for online shopping.
No Impact on CIBIL Score: Using a prepaid card won’t help improve your credit score.
Fees: Some prepaid cards charge fees for adding money, maintaining the card, or using it, which can add up.
Note: Even though a prepaid card won’t boost your CIBIL score, it can help you avoid credit problems while enjoying the convenience of card payments.
Banks offer credit cards for people with bad credit scores. These cards usually have higher fees and lower credit limits. While they might not seem great, they can help improve your credit score if used wisely.
You’ll start with a lower credit limit, but it may increase over time if you use the card responsibly.
Annual fees and other charges can be higher than regular credit cards.
Credit-Building Opportunity: Making regular, on-time payments can help rebuild your CIBIL score.
Access to Credit: You can still get credit even with a bad credit score, but with some limits.
Higher Costs: These cards often come with high interest rates and fees.
Lower Limits: Your initial credit limit will probably be low, so you won’t have much credit available.
Tip: If you get this type of card, always pay your bills on time and don’t max it out. This can really help improve your credit score over time.
Store credit cards, also called retail credit cards, are offered by certain stores for shopping at their locations or websites. They are usually easier to get approved for, even if you have a bad credit score.
These cards can typically only be used at the store that issued them.
They often offer special discounts, cashback, and rewards for shopping there.
Easy Approval: Store credit cards usually have less strict rules for approval.
Exclusive Offers: You can get discounts and rewards when shopping at the store.
Opportunity to Rebuild Credit: Making payments on time can help improve your CIBIL score.
Limited Usage: You can only use the card at that specific store, so it’s not very flexible.
High Interest Rates: These cards often have higher interest rates, so it’s important not to carry a balance.
Subprime credit cards are made for people with bad credit or those seen as high-risk borrowers. These cards are offered by some banks that are willing to lend to individuals with low credit scores. They usually have higher interest rates, annual fees, and strict rules.
They come with a lower credit limit and much higher interest rates than regular credit cards.
If you use them responsibly, they can help improve your credit score, but missing payments can make your score worse.
Easier Approval: You have a better chance of getting approved even with a bad CIBIL score.
Credit-Building Opportunity: Using the card responsibly and making payments on time can help rebuild your credit score.
High Interest and Fees: Subprime credit cards can be costly, with high annual fees and penalties for late payments.
Strict Terms: Missing a payment or going over your credit limit can lead to big penalties.
People with a bad CIBIL score have different types of credit cards to choose from, each suited for various financial needs. Options include secured cards, prepaid cards, store credit cards, and subprime cards. These can help rebuild credit and manage spending. Each type has its own pros and cons, but using them responsibly—like paying on time and avoiding high-interest debt—can improve your credit score over time. By knowing about these options, individuals can make smart choices that help them regain financial stability and build a better credit future.
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Secured credit cards require a cash deposit that serves as collateral. This deposit often becomes your credit limit, making it easier to get approved even with a bad CIBIL score.
Prepaid credit cards allow you to load money onto the card before using it. You can only spend what you load, so there's no risk of overspending or accruing debt.
Store credit cards are offered by specific retailers. They are usually easier to get approved for and come with discounts or rewards for shopping at that store.
Subprime credit cards are designed for individuals with poor credit. They often come with higher interest rates and fees but can help improve your credit score if used responsibly.
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