How to Get a Credit Card Without Any Credit History

One can apply for a credit card without any credit history by either choosing a card suitable for first-timers or a credit card that requires a fixed deposit (FD). The latter works on the principle that the bank freezes a particular amount of money as a deposit with the bank. The credit limit depends on the bank’s criteria, and sometimes the income, occupation, banking relationship, and other factors are taken into consideration. It is important to go through the eligibility criteria of the credit card, annual fees, maintenance charges, FD requirements, credit limit, and repayment tenure. Moreover, good payment behaviour will build a credit history.

Key Takeaways:

1. An FD-backed credit card might be a good idea for people who don't have any credit history.
2. The banks will look at your income, banking history, and other factors.
3. Also, paying off the balance on time can improve your credit history.
4. Before applying, compare the annual fees, FD requirement, credit limit, and spending limits to choose a card that suits your needs.

What Is a Credit History?

Credit history refers to the type of borrowing history that one has had in the past. This history contains information about credit cards, loans, payment behaviours, amounts owed, and whether payments were made on time. Simply put, it informs lenders about your credit behaviour in the past.

For instance, some people may have no credit history if they have never taken a loan before. On the contrary, others could have an impressive credit history if they always pay their debts on time.

Is It Possible To Get A Credit Card With Zero Credit History In India?

Getting a credit card without a CIBIL score can be challenging, but there are still some options. For example, a secured card, an add-on card, or the possibility to apply based on one's salary can be a good choice for a first-time borrower.

Secured Credit Card: 

A secured credit card is issued against a fixed deposit (FD). The FD amount determines the credit limit that is offered. Therefore, such cards may be relatively easy to obtain, as the applicant has already tied up funds with the bank in the form of a deposit. Moreover, the regular use of the card and timely payment of dues can help the card user to build their credit history.

Add-on Credit Card: 

This is a type of add-on card that is issued to a family member of the main cardholder. The add-on card typically has the same set of benefits as the primary card. However, the applicant must have a good credit history, and the primary cardholder is responsible for any unpaid amount. Responsible use of the card and timely payment of dues may improve one's credit behaviour, depending on the terms and conditions offered by the issuing bank.

Credit Card Against a Savings Account: 

One can also try to get a credit card against a savings account. The credit card limit will depend on the amount of money held in the savings account at the time of application, and the bank may consider that when determining the credit card's eligibility and limit. This option may be good for someone who has an account with the bank but has not yet built sufficient credit history.

Prepaid Card: 

Finally, one can also consider a prepaid card. With this type of card, the money must first be loaded on the card in order to make purchases. However, a prepaid card is not actually a credit card, so it will most likely not help one build credit history with CIBIL. Before opting for this solution, it is necessary to check what benefits the card offers.

Credit Card Based on Salary: 

One's credit history is not the only criterion for granting a loan. When applying for a credit card, the applicant's income and employment history may also be taken into account. Therefore, a person who has a regular income and meets the eligibility criteria can apply for a credit card based on salary. In this case, the credit card may be issued either on the salary account or on a personal account at the bank where one's salary is deposited.

If one does not have a CIBIL history, he/she should consider which option would be the best for his/her financial needs and compare the eligibility criteria, credit limits, and repayment conditions.

Why Your Credit History Matters While Applying For A Credit Card?

A credit history provides the lenders with an overview of your borrowing and repayment behaviour. Credit cards' approval can be influenced by credit history, but the overall financial situation of the applicant is considered.

1. Credit score refers to a three-digit number based on the creditworthiness of an individual and his repayment history. TransUnion CIBIL is one of the credit agencies in India that maintains records regarding credit behaviour. Having a good credit history is essential since it helps you to avail of certain benefits.
2. While applying for a credit card, the bank checks the credit report and score of the applicant to evaluate the repayment behaviour. A good credit score can increase the possibility of credit card approval, but it is not the only deciding factor.
3. There is no fixed CIBIL score required for credit card approval. Every bank has different credit card eligibility criteria. The financial entity considers various factors like monthly income, age, profession, residence, current debts, repayment history, and more for credit card approval. 
4. The banks analyse the borrower's profile and risk appetite before approving the credit card. In other words, the lender checks the person's credit report and score and approves the application accordingly. 
5. Credit cards are a type of unsecured loan, and hence the lenders check every aspect of the borrower's creditworthiness before approving the application.

To sum up, it can be stated that credit history is crucial in the approval process. However, it should be complemented with other factors like income, debts, repayment history, and more. Timely payment of dues and maintenance of a good credit history can positively influence credit card approval.

What Are The Different Ways To Build Your Credit History?

If you have not borrowed anything before, you cannot have a credit history. A couple of smartly chosen credit options will help you build one. Here are some ways to do that:

To conclude, building credit history takes time and patience. Only take credit that you can repay and ensure that you have a diversified portfolio.

Bottom Line 

The possibility of obtaining a credit card at a time when I do not have a credit history means that my options may be limited. In such a case, an FD-backed card would be a good choice because the issued deposit will be safe for the bank. However, I will still need to ensure that I spend only what I can afford to pay back. In the future, I will be able to build my credit history with this card and expand my borrowing opportunities.

FAQs

Can I get a credit card without a CIBIL score?

Yes, you can. Secured, add-on, and income-based cards are some of the credit cards that can be considered while having little or no CIBIL score.

What is a secured credit card?

A secured credit card is a credit card that requires the card applicant to place a sum of money on a fixed deposit (FD) with the bank. The FD amount acts as collateral for the issuer bank, and the credit limit is decided by the issuer based on the FD amount.

Can a secured credit card help build up my CIBIL score?

Yes, in case the issuer of the secured credit card reports to the CIBIL bureau, it will help in building up your credit history, which in turn will help improve your CIBIL score.

Can I get a credit card from the bank that credits my salary?

Yes, you can. In this case, the bank where the applicant's salary is credited will assess the applicant's profile to decide his/her eligibility for a credit card.

Does an add-on card help build credit history?

An add-on card is a card that is issued against the primary card. In this case, it will depend on the card issuer if the add-on card's credit activity will be reported to the CIBIL bureau.

Is a prepaid card the same as a credit card?

No, a prepaid card is not the same as a credit card. This is because, with a prepaid card, you spend the money that you load on the card and not the bank's money. Also, you should not think of a prepaid card as a replacement for a credit card if you wish to build your credit history.

What should my CIBIL score be to get a credit card?

There is no specific CIBIL score that is required to get a credit card. This is because different banks and other lending institutions have different criteria. Moreover, your income, profession, existing debts and repayment history also matter.

Can first-time borrowers get a credit card?

Yes, first-time borrowers can get a credit card. Just because you do not have a credit history does not mean you will be denied a credit card. However, you should apply for a credit card that is suitable for first-time borrowers.

How can I build my credit history?

There is no magic trick to build your credit history. You need to be smart about it and start with small steps. Do not spend more than you can repay. Apart from that, you should also pay your dues on time. If you do this, you will build your credit history without much difficulty.

Why is it important to have a good credit history?

Having a good credit history can be beneficial in many ways. Firstly, it can help you get a credit card or a loan easily. Secondly, it can also help you get better terms and conditions on a credit card or a loan.