Smart Alternatives for People with Bad Credit Score

Have you applied for a credit card, and it was rejected by the bank?

Well, try to find those credit cards that fit your profile, and try your level best to rebuild your credit worthiness, by paying it off in full for ‘bad credit’ cards.

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The credit rating of an individual is measured by his credit score. After insolvency of a large number of banks in US, in 2009, the financial institutions and banks adopted strict lending laws in India, in order to reduce the risks with their cash. Now-a-days, it’s mandatory to have a good credit score for seeking loans or credit. Thankfully, several alternatives are available for people with bad credit history.

Credit Card Alternatives

The following 3 credit cards are offered to those who have been turned down for conventional credit cards.

1.    Subprime Credit Cards

These cards are issued to people having limited credit histories and substandard credit scores, or to those who are declared bankrupt. These cards have low credit limits. High interest rates and annual fees are also associated with these cards. Several major issuers and small financial institutions offer these cards.

2.    Secured Credit Cards

In order to acquire a secured credit card, you will have to maintain a saving account with the issuer bank. This account serves as a backup if you fail to pay. The limit of the credit is decided on the basis of balance that you keep in your account; it’s either the balance money or a percentage of it. Some banks (like, Axis Bank, Royal Bank of Scotland, SBI Bank and ICICI Bank) issue this card against a FD (Fixed Deposit). The credit limit of the card is 85 % of the FD amount.

Advantages of holding secured credit card:

  • You may get interest on your saving account.
  • As compared to their secured counterparts, interest rate on these cards is lower.
  • You can obtain this credit card with least documentation.
  • Apart few exceptions, generally these cards will not attract any yearly fees.
  • It provides you a golden opportunity to recover your credit worthiness. You might get a traditional card if you succeed in handling the secured credit card for a year or more.

 3.    Prepaid Credit Cards

Be it ICICI Bank, HDFC Bank, or Axis Bank, almost all major banks in India offer prepaid credit cards to its customers. These cards are very similar to a debit card; the only difference is that you need to deposit amount with the card issuer for getting prepaid credit cards. You are allowed to expand against this amount. This card is the best option for people who need credit cards for online transaction or travel, but do not get qualified for the traditional credit cards.

 Advantages of holding secured credit card:

  • These cards come with hundred percent guaranteed approvals. You can obtain the card immediately, without submitting any income proof!
  • These cards facilitate online transaction. This facility is not available with debit cards.
  • Unlike traditional credit cards, you don’t need to pay any interest on these cards.
  • In case, the balance in the card is exhausted, just recharge your bank account. The card is ready to use again.

Loan Alternatives

Bad Credit Personal Loans

Personal loans can be a blessing in case of financial emergencies. It’s not possible to avail this loan if you hold a bad credit history. This problem can be resolved through bad credit personal loans. Remember, on the loan, you need to make timely payment, every month. As borrower’s credit worthiness is used to approve the loan, rate of interest is very high. However, in case of serious debt, your application for the loan may get rejected. You can apply for the loan if you are 18 years old, have ‘no’ or ‘bad’ credit, maintains an account in the bank, or are engaged in any job.

Advantages of Bad Credit Personal Loans

  • Borrower is not required to provide any security against the loan.
  • These loans offer you the opportunity to improve your credit history.

No matter which alternative you opt, try to improve your bad credit history.

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