Credit Card Without A CIBIL Score: Alternatives to Explore

Having a good credit score is a crucial factor in the world of personal finance, especially when it comes to obtaining credit cards and loans. However, many individuals, particularly young adults or those with limited credit history, may find themselves without a CIBIL or any other credit score. While a CIBIL score is widely used in India, similar credit bureaus and scores exist in other countries. The absence of a credit score can make it challenging to get a credit card, but it’s not impossible. Let us explore some effective strategies to obtain a credit card without a CIBIL score.

Apply for a Secured Credit Card

A secured credit card is an excellent option for individuals without a credit score or with a poor credit history. With a secured credit card, you are required to deposit a certain amount of money as collateral, which then becomes your credit limit. Since the credit line is secured by your deposit, the risk to the issuer is reduced, making it easier for individuals without a credit history to get approved. Here are some of the top banks/financial institutions offering secured credit cards in India:

Bank/Institution	Card
State Bank of India	Advantage Plus Credit Card
Axis Bank	Insta Easy Credit Card
ICICI Bank	SimplyClick Credit Card
HDFC Bank	Flexi Rewards Credit Card
Kotak Mahindra Bank	Kotak811 #DreamDifferent Credit Card
IDBI Bank	Imperium Platinum Credit Card
YES Bank	Prosperity Rewards Plus Credit Card

Become an Add-On Cardholder

If you have a family member, such as a parent or a spouse, with a good credit history and a credit card, you can ask them to add you as an authorized user or an add-on cardholder. By doing so, you can benefit from their credit history, and some banks may even report the payment activity on the add-on card to credit bureaus, helping you build your credit profile.

Credit Builder Loans

Certain financial institutions offer credit builder loans or credit-building programs designed explicitly for individuals with no credit history. These loans typically have a small borrowing amount, and the repayment terms are structured in a way that helps establish a positive credit history. By making timely repayments, you demonstrate creditworthiness, which can eventually help you qualify for a credit card.

Explore Co-Signing

Another option to obtain a credit card without a credit score is to have a cosigner with a good credit history. A co-signer is someone who agrees to be responsible for the credit card debt if you fail to make payments. By having a co-signer, the credit card issuer may be more willing to approve your application, as they have the added assurance of the co-signer’s creditworthiness.

Approach Credit Unions

Credit unions are nonprofit financial institutions that often have more flexible lending criteria compared to traditional banks. They may be more willing to work with individuals without a credit score and offer them credit cards or credit-building solutions.

Explore Retail Store Credit Cards

Some retail stores offer credit cards that are easier to obtain compared to traditional credit cards issued by banks. These store credit cards usually have lower credit limits and higher interest rates, but they can serve as a stepping stone to building a credit history.

Prepaid Credit Cards

Prepaid credit cards are not conventional credit cards, but they can be a useful tool for financial management and online transactions. With a prepaid credit card, you load money onto the card, and you can use it like a regular credit card until the balance is depleted. While they don’t directly contribute to building a credit score, responsible usage of prepaid cards can lead to a stronger financial foundation.

Other Factors to Consider

Credit card issuers consider various factors when evaluating credit card applications, and while the CIBIL score is a crucial aspect, it is not the sole determinant for approval. Here are some other factors that can affect credit card approval:

Income and Employment Stability: Your income level plays a significant role in determining your creditworthiness. Credit card issuers want to ensure that you have sufficient income to meet your financial obligations and repay the credit card debt. A stable employment history can also enhance your chances of approval, as it reflects your ability to maintain a steady income.
Debt-to-Income (DTI) Ratio: The debt-to-income ratio is the percentage of your monthly income that goes toward debt payments. A lower DTI ratio is preferable because it indicates that you have enough income to manage additional debt, such as credit card payments, without overextending yourself.
Credit History and Payment Behavior: Apart from your credit score, credit card issuers assess your credit history to determine your creditworthiness. They look at factors like the length of your credit history, the number of accounts you have, and your payment behavior. Consistently making timely payments and having a positive credit history can improve your chances of approval.
Existing Debts and Credit Utilization: If you have high outstanding debts or are utilizing a significant portion of your available credit (high credit utilization), it can negatively impact your credit card application. Lenders may perceive you as being financially burdened or having a higher risk of default.
Relationship with the Bank: Existing relationships with the bank or financial institution can play a role in the approval process. If you already have a savings or checking account with the bank, they may consider you a preferred customer, increasing your chances of credit card approval.
Type of Credit Card: Different credit cards have varying eligibility criteria. For example, premium or rewards credit cards often require a higher credit score and income level compared to basic or secured credit cards.
Number of Recent Credit Applications: Frequent credit applications in a short period can raise red flags for lenders and may indicate financial distress. To get approved for a credit card, ensure that you do not apply for too many credit cards at once.
Purpose of the Credit Card: Some credit cards cater to specific purposes, such as travel rewards or business expenses. The purpose for which you are applying for the credit card may influence the approval decision.

Key Takeaways

In conclusion, while having a credit card without a CIBIL score may pose some challenges, it’s not an insurmountable task. By exploring secured credit cards, credit builder loans, and other alternative credit options, you can begin building a positive credit history. Responsible financial behavior, such as making timely payments and keeping credit utilization low, will gradually improve your creditworthiness and open doors to more traditional credit card options in the future. Remember that building credit is a gradual process, and patience and discipline are key to achieving long-term financial success.

AMIT ARORA

I am a seasoned retail banker with over 21 years of global experience across business, risk and digital. In my last assignment as Global Head Digital Capabilities, I drove the largest change initiative in the bank to deliver the end-to-end digital program with over US$1 billion in planned investment. Prior to that, as COO for Group Retail Products & Digital, I implemented a risk management framework for retail banking across the group.