When applying for a credit card or personal loan, your CIBIL score (or credit score) plays a crucial role. A low credit score often results in application rejections, making it difficult for many to access credit. However, if you’re facing a similar situation, there are still ways to get approved — even if your score is very low or even zero. Let’s explore the options available and the key reasons your credit score might be suffering.
Ways to Get a Credit Card or Loan with a Low CIBIL Score
1. Opt for a Secured Credit Card
Secured credit cards are ideal for individuals with a poor credit score. These are issued against a fixed deposit (FD), allowing banks to recover funds in case of default. Because of the low risk to the bank, approval is easier even with weak credit history.
2. Apply for an Add-On Credit Card
If a family member owns a credit card, you can become an add-on cardholder. In this case, the primary cardholder is responsible for bill payments, so your CIBIL score is not considered for approval.
3. Showcase Financial Stability
If your income is stable but your credit score is poor, provide proof such as salary slips, income tax returns, and bank statements. If the bank is confident in your repayment ability, they may approve your credit card or loan despite the low score.
What is CIBIL Score & Why It Matters
Your CIBIL score is a three-digit number ranging from 300 to 900, representing your creditworthiness. It’s calculated based on your repayment history, existing loans, credit card usage, and defaults. A higher score means better chances of getting credit at favorable terms. Here’s how certain habits negatively impact your score:
7 Common Reasons Why Your CIBIL Score Drops
1. Missing EMIs
Skipping loan EMIs directly affects your credit score. Repeated defaults or non-payment can severely damage your score, making it difficult to get credit in the future.
2. Taking Large Loans
High loan amounts increase your debt burden, signaling to lenders that you may struggle to repay. This can lower your credit score and reduce your chances of securing additional credit.
3. Frequent Loan Applications
Applying for loans from multiple banks within a short period triggers multiple hard inquiries, each of which can reduce your score. Hard inquiries occur when a lender checks your credit report, unlike soft inquiries, which happen when you check your own score.
4. High Credit Card Spending
Using too much of your credit card limit raises your credit utilization ratio, which negatively impacts your credit score. Experts recommend keeping usage below 30% of the total credit limit.
5. Repeated Credit Card Applications
Frequent applications for credit cards also lead to hard inquiries, which can reduce your score temporarily. Even though it may recover with time, too many inquiries in a short span look risky to lenders.
6. Closing Credit Cards
Cancelling a credit card reduces your total available credit, raising your credit utilization ratio. This can lower your credit score even if you’re not overspending.
7. Prepaying Loans Early
Paying off a secured loan early might slightly reduce your credit score. However, this drop is usually temporary and your score will stabilize over time.
Conclusion: Rebuild Your Credit and Choose Wisely
A poor CIBIL score is not the end of the road. With the right financial behavior and strategies, you can still access credit and rebuild your score. Choose secured options, avoid unnecessary applications, maintain disciplined repayments, and monitor your credit regularly. Eventually, with time and responsibility, you’ll regain your financial footing.