CIBIL score is the number one factor lenders look for before approving a loan. So, here are two scenarios where the advice below will be beneficial to you
a. Your CIBIL score is either 0 or a negative one, and you have no credit history.
b. You’ve previously missed loan or credit card payments, have a low CIBIL score, and no one wants to lend you new loans because of this.
Here’s the solution : Get a secured credit card.
NOTE : You can get your CIBIL score on your phone for FREE.
What is a secured card card ?
A secured credit card is a type of credit card that can be obtained in exchange for a fixed deposit (FD) with the issuing bank or credit card company.
To apply for a secured credit card, a minimum fixed deposit amount is set by each bank. Your credit card’s overall credit limit is closely correlated to the amount in your FD account. This implies that the bigger the amount of your FD, the higher the credit card limit. Banks often set the credit card limit at between 75 and 85 percent of the FD amount.
You don’t need to provide any additional income documentation in order to apply for a credit card when you create an FD with the bank. As a security deposit for the credit card, the FD is used.The bank or credit card issuer maintains the right to cancel your deposit in the event of a credit card payment default. However, the bank would notify you in advance through all available lines of communication.
On the other side, the bank or the issuer would delink your FD if you had a secured credit card in good standing for a predetermined period of time, let’s say one to two years.