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Credit cards are very convenient tool to make purchases and pay for them later. Moreover, it comes with lot of reward points, cashback offers, discounts etc. When you desperately look for a credit card to manage your finance, it could be difficult to get hold of one when you have bad credit. Nevertheless, it is not impossible to get one if you have explored the options to get one.

Besides credit score, the lenders now-a-days use different criteria to provide credit products. Some of the credit cards are approved instantly even with bad credit history. Let us look at how you can apply for such credit cards and where to find the lender who offer credit cards for bad credit.

How to Get Credit Cards with Bad Credit?

What Is a Bad Credit?

A bad credit history or credit score is a resultant of poor management of your credit. It could be due to any of the following reasons

  • Late payments on your loans and credit cards
  • If you have missed your payments on your loans and credit cards
  • Foreclosure
  • Written-off or settled account
  • Too many hard enquiries

A bad credit puts you in the bad book of the creditors and any future loan application is turned down due to the above reasons.

Getting Credit Cards for Bad Credit

There are lot of options available to get a credit card even if you are having a bad credit. You can either apply online or visit a nearby bank to get one.

Secured Credit Cards

This kind of cards can be availed when you have poor credit history. As the name implies, secured credit cards can be obtained against the fixed deposit of your bank account. You will be extended credit limit up to 80% of the fixed deposit.

Banks usually do not reject your secured credit card application as they have the security of your fixed deposit. You can make payments up to the limit allotted to your credit card. There won’t be any problem as long as you make consistent credit card bill payment. But when you default on the payment, the bank will deduct from your fixed deposit for the amount to be paid. Default could affect your credit score further.

Alternative Lending

This is an emerging phenomenon in the lending market. Various lenders now offer credit cards to individuals with no credit or bad credit. Credit score is not considered a major criterion to provide a credit card.

The eligibility is checked based on your income and social media profiles. This type of evaluation has enabled many to get a credit card even without a credit history. Hence if you have a stable income and have presence in the social media, nothing can stop you from getting a credit card matching your credit profile.

How to Improve Your Bad Credit?

One cannot improve their bad credit overnight. Having bad credit is not the end. One can improve the credit score by following the steps given below.

1. Paying of your old debt

In case you have a “settled” account – where you have only paid partial amount of your debt or “written off” account – you did not pay your debt at all and the bank has considered it as a bad debt and conveyed the same to the credit bureau, you need to settle those accounts. If you do this, it will boost your credit score.

2. Keep your credit balances low

Make sure that you don’t exceed more than 50 % of your credit limit. This helps you to keep your credit utilization ratio (the proportion between your actual spending and your credit limit) at a lower rate and has a positive impact on your score. For example, if your credit limit is Rs. 1 lakh, make sure that you do not exceed a monthly bill of more than Rs. 50,000. A bigger credit utilisation ratio implies lack of spending discipline.

Remember to pay your dues in full rather than paying the minimum amount for your credit cards.

3. Apply for new accounts only when needed

Make sure that you don’t open too many new credit accounts. Every time you apply for credit (whether a loan or credit card) it results in an enquiry by lenders. Multiple enquiries in your credit report reflect that you are ‘hungry’ for credit and may not be able to fulfil your debt obligations.

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