According to recent surveys, only 15% of the Indian population has a CIBIL score of 800 or higher. The rest falls below the recommended limit by the credit bureau, or have no credit score altogether. This category faces a difficult time when applying for a credit card or even a loan.
Strong CIBIL score proves that the borrower is financially responsible and has a higher chance of repaying the debt. Financial institutions prefer candidates with a good credit history because of the unsecured nature of credits cards. However, there are a few ways in which one can apply for credit cards despite having no credit rating. Follow the suggestions mentioned below if you do not know how to apply for a credit card with no CIBIL score.
Show a steady source of income
A steady source of income gives you sufficient financial backing to repay your credit card’s dues. Financial institutions consider that you can pay the debts without affecting your monetary obligations efficiently.
Lenders will consider 2 key factors –
1. Your job profile – Working with a reputed MNC, private, or public organisation will improve your job profile. You will have a stable job and timely salary to pay off your dues within time.
2. Your salary – A lender is more likely to approve your credit card’s application if you have a high income. You will have enough funds to clear the dues even after meeting your financial obligations.
Opt for secured credit cards
A secured credit card is issued against a deposit. For example, if you put Rs. 1 Lakh as a deposit, the lender allocates 70% to 80% of the total amount as the credit card limit.
Secured credit cards generally come with a higher application and processing fees. However, it is ideal for people with low CIBIL score as the lender has a security to liquidate, in case of defaults.
Check for pre-approved cards
Multiple financial institutions offer pre-approved credit cards. For example, the Bajaj Finserv RBL Bank SuperCard comes with pre-approved offers and requires minimum credit card eligibility criteria to fulfil.
You are offered a pre-approved card when you have already met a financial institution’s credit card eligibility criteria .
Why is credit score important?
If you apply for credit cards with no credit score, you may not get exciting features and benefits that these cards offer. Also, the limit will be lower, and the lender may charge you a higher interest rate.
There are some tips you can follow to improve your credit score. Let’s take a look at 2 of those:
● Pay the dues in time – Your credit score shows how you manage your debts. Try paying the total amount due within the grace period. You will save on interest and build a strong credit history.
● Stay within the credit utilisation ratio – Do not spend more than 30-50% of your credit limit. Your CIBIL score improves if you stay within this credit utilisation ratio as you will not be designated as a credit hungry individual.
Follow these tips to apply for credit cards without a good credit score. You can use it to improve your CIBIL rating and then apply for a card with a higher limit, more features and benefits.