This credit card can boost your bad credit history

Secured credit cards linked to your deposit account is a good way to boost your bad credit history, writes Nikolai Kirtikar

Was your credit card application rejected because of bad credit history? No need to panic. Now, there is a solution to it. There is good news: You can still get a credit card despite bad credit history.

But before we talk about the solution, let us understand some probable reasons why your credit card application maybe rejected by the credit card issuer.

Some of these are:

• If you have defaulted in the past on repayment of any loans or credit card dues
• If you are a first timer and thus have no credit history in CIBIL
• You do not fit in the minimum income criteria
• Not meeting any specific criteria of the card issuing company
• Not available to the credit investigating agency representing the card issuing bank / company

So if any one of the above-mentioned factors is the reason, the solution lies with credit cards backed by some kind of security, also called as secured credit cards that banks issue.

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These are 100 per cent guaranteed credit cards issued against the security of your fixed deposits, also known as term deposit and normally offers a credit limit of up to 80 per cent of your term deposit amount.

So even if you have a bad credit history or no documents to prove your income, you will be eligible to get these secured credit cards. There is no waiting period for these types of cards and are issued over the counter against your term deposit.

But to get this, you will have to have a term deposit with a bank that offers these secured cards. Remember not all banks offer these cards. So probably you will have to open a new term deposit account with the bank that provides these secured credit cards.

A secured credit card is ideal for people with poor or no credit history or those who find it difficult to get unsecured credit card for various other reasons. If used wisely it can also help in establishing or repair a bad credit history.

The trick lies in making small purchases in the beginning and making timely payments. This will positively boost your poor credit score. But make sure the bank reports all your transaction history to CIBIL. After all you wish to improve your credit history / score!

Secondly by being secured against your term deposit, you need not worry about your application being rejected by the bank and effectively hurting your credit score. The prospective lenders view too many unsecured credit card applications showing in CIBIL report negatively. It is considered as a sign of credit hungry individual.

Secured credit cards can be used for any purchases in the same way you use a normal credit card. Some of these cards offer reward points too. Any defaults in payment of dues get debited from your term deposit with the bank. Since the objective is to improve credit score, it will be unwise to default on payments.

Some of the secured credit cards offered by banks are:

• ICICI Bank Instant Credit Card
• Kotak Aqua Gold Card
• Axis Bank Insta Credit Card
• SBI Advantage Plus Card

But before you rush to get a secured credit card it would make sense to shop around for the best deal. Some banks charge fees for joining and annual subscription, then there are charges for revolving credit, late payment and over limit etc. Different cards will have different minimum deposit amount requirement and some other limitations too!