Is it Possible to get Credit Card with Bad Credit Score?

Jun 12 2019 09:30 AM
Is it Possible to get Credit Card with Bad Credit Score?

A bad credit score can prove to be a real roadblocking one’s life, especially when it comes to availing new credit. Anything below 620 is considered an unhealthy credit score of banks and hence, at this score, credit card options get very limited. The lower your credit score, the harder it will be to get any new credit as it indicates that you have not managed your debt properly in the past and hence, the risk of default is higher.

First and foremost is to check and track your credit score regularly. You can pull out your credit score along with credit report from any of the online platform which is providing this service. A credit card can be a good tool to both, build and improve your credit score. There are entry-level credit cards available for those who want to build their credit score and secured credit card for those with a low credit score. Getting a credit card and using it responsibly goes a long way in improving your credit score.

Secured Credit Card

A secured credit card requires you to submit a security deposit with the bank before the credit card is allotted to you, and it is refundable. This deposit works as a security for the bank which it can use in case you default from the payments. Other than this, it works similar to an unsecured credit card as you are charged interest based on your spending and you need to pay as per the monthly bill generated.

Just as in unsecured credit card, paying minimum monthly due is mandatory, so is the case with the unsecured credit card as well. Timely payment of dues is one of the most crucial aspects in calculating the credit score. You need to use the credit card responsibly to improve your credit score. Also, the banks upgrade their secured credit card holders to an unsecured credit card as credit score improves.

Typically, secured credit cards have a lower fee and come with fewer benefits when compared to an unsecured credit card. For availing a secured credit card, you need to provide identity verification and income proof.

Add-on Credit Card

If someone in your family already holds a credit card, then you can request them to add you in it and get an additional credit card. When an add-on is done on a credit card, then the credit limit gets shared between both the cards, i.e., primary and add-on credit card.

The add-on card works in the same manner as the primary card or an unsecured card. The billing of the add-on card and the primary card is not different which means even after having the add-on card only one bill is generated, and the payment is to be made in the same manner as it was just one card.  

To avail an add-on card, you need to have a family member who already owns a primary credit card. You cannot get an add-on card with anyone of your choice. Although, the billing and payment of add-on cards are not separate but timely payment of dues will get registered in the credit score details of the add-on card holder as well and hence, contribute towards improving the credit score

Credit Card against Savings Account and Fixed Deposit

Few leading banks in the country also provide credit card against savings account as well. In this case, you need to deposit a minimum balance in your savings account for getting a card and transacting. In this manner, the bank reserves the right to recover their dues from your savings account in case of any delay or default.

Similarly, you can also get a credit card issued against your fixed deposit. The card will only be issued by the same bank with whom you have a fixed deposit account. The banks which provide this facility already have predefined criteria as to which card or cards are available based on the amount of fixed deposit made.

The features like interest, late fee, annual and renewal fee, joining fee, and benefits work in the same fashion as the standard unsecured credit card. ICICI Instant Platinum credit card, SBI Signature credit card are against fixed and saving deposits.

Prepaid Credit Card

People who have a bad credit score can also apply for a prepaid credit card. A prepaid credit card is a secured credit card issued by most of the financial institutions and NBFCs which is guaranteed by a prepayment. The card is pre-loaded with a certain amount of funds that you can use for making your transactions.

A prepaid credit card can be availed instantly, irrespective of bad credit score, income, and existing credit card. With a prepaid credit card, you can make the purchases without incurring any debts, and paying high interest.

Few Tips

You can choose from the above options of the credit card as per your situation and start your journey to our credit score. Here are a few tips which you can use to avoid any hiccups on the journey of improving your credit score:

1. Regularly check your credit report: Every month you should check your credit report to track your progress and in case of any error, you should report it to the credit bureau and get it rectified on an urgent basis

2. Use the credit card as per budget: The best way to use a credit card is to spend only to the extent which you can ultimately pay off in the next month. So, keeping this in mind make a budget for your credit card spending and never spend more than what you have set for yourself.

3. Timely payment: As mentioned earlier, making timely payment of your credit card dues is an essential aspect to improve your credit score. So, make sure you never miss the due date. The best option would be to make the payment well before the due date or set multiple reminders for it.

Having a bad credit score is not a comfortable position to be in. However, you must not give up and set a path for yourself to make your journey of improving the credit score easier. By opting from the suggested credit card options and following the given tips, you are all set for a smooth ride towards a better credit score.

Author Bio:

Nishant is a passionate blogger and a financial adviser. He has been serving society as a financial adviser for the past 6 years. He loves studying various topics and news related to financial matter in the market. He usually shares his opinion on Greetings of the Day.

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