How to Manage Credit Card for low CIBIL score?

Do you want to get a chance to rebuild your credit? Improve your financial standing? Explore future opportunities for loans? All this is possible if you understand how a credit card for a low CIBIL score works. But there are many hurdles that come in your way.

Should you look for cards specifically designed for individuals with poor credit, often labelled as “secured” or “starter” cards? Or do you require a security deposit and will have to face higher fees or interest rates? To answer all of this and more, read ahead.

Why Having a Bad Credit Score Can Be Challenging?

Having a bad credit score in 2024 can be tough for you. Here’s why:

1. Limited Options

If your score is below 600, you might struggle to find good credit card options. Many providers see it as risky to lend to you, so they may offer you cards with higher interest rates and fewer benefits. This limits your choices and makes it harder to manage your finances effectively.

2. Higher Costs

Cards available for those with poor credit often come with higher interest rates. This means you’ll end up paying more in interest charges, making it harder to pay off your balances and get ahead financially.

3. Less Access

With a bad score, you may find it difficult to access credit when you need it. This can be stressful, especially in emergencies when you rely on credit for unexpected expenses.

4. Rebuilding Challenge

While there are cards designed to help rebuild credit, it takes time and discipline to improve your score. Making timely payments and keeping balances low are crucial, but it can still be a slow process. This can be frustrating as you work towards better financial stability.

To sum it up, a bad credit score in 2024 means limited options, higher costs, less access to credit, and challenges in rebuilding your financial reputation

Credit Card Options with Low CIBIL Score

SBI Advantage Plus Credit Card:

Accepted globally against fixed deposits.
Cash withdrawal from many ATMs worldwide.
Convert spends into EMIs.
Annual fee: Rs.500.

SBI Unnati Credit Card:

No annual fee for first four years.
Secured card against fixed deposit above Rs.2.5 lakh.
Contactless transactions available.
Annual fee: Nil for the first four years.

Axis Bank Insta Easy Credit Card:

Credit limit up to 80% of your FD.
1% fuel surcharge waived on fuel transactions.
No joining or annual fee.

Kotak Mahindra Aqua Gold Credit Card:

Credit limit up to 80% of FD amount.
Interest-free cash for up to 48 days.
Joining and annual fee: Nil.

These cards can be helpful if you’re struggling with a low credit score. They offer features like cash withdrawals, EMIs, and no annual fees to ease your financial burdens. However, remember to be cautious of late payment fees and interest charges, which can add up if not managed properly.

Practical Tips for Managing a Credit Card with a Low CIBIL Score

Having a low CIBIL score can make handling a credit card tough, but you’ve got options. Here’s what you can do:

Start with a secured credit card: This type of card asks you to put down a deposit first, like a security payment. It might feel like a hassle, but it can help you build back trust with lenders.

Watch out for high interest rates: Some cards might accept you even with a low score, but they could charge you more interest or extra fees. That means you’ll end up paying more in the long run, so be careful.

Look into smaller banks or credit unions: They might be more understanding of your situation and could offer you a card with better terms than big banks.

Consider a co-signer: If you’ve got a friend or family member with a good credit score, they could vouch for you by co-signing on your card. Just remember, if you mess up, it hurts both of you.

Keep an eye on your spending: With a low score, it’s crucial to manage your card wisely. Don’t overspend and always pay your bills on time. This will slowly make your credit score better.

Remember, it might feel frustrating now, but with patience and responsible use, you can turn things around. You’ve got this!

How You Can Use Co-Signed Credit Cards?

So, if your credit score is low and you need a credit card, you might face some challenges. But there’s a solution: co-signed credit cards.

Here’s the deal: if you have a friend or family member with a good credit score, they can help you out. They co-sign with you on a credit card, basically saying they trust you to pay your bills.

This helps you because you can get a credit card even if your own credit score isn’t so good. But here’s the thing: if you don’t pay your bills, it doesn’t just hurt your credit, it also hurts your co-signer’s credit.

So, it’s like a two-way street. It gets you a credit card, but it also means you have to be responsible with your payments. Otherwise, both you and your co-signer could end up in trouble.

In your financial planning journey, navigating a low credit score can be tough. With cards like SBI Advantage Plus, SBI Unnati, Axis Bank Insta Easy, and Kotak Mahindra Aqua Gold, there’s hope. But watch out for fees. Co-signed cards offer solutions, but responsibility is key for both parties.