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Top Credit Cards for Individuals with Bad Credit

A bad credit score can quietly affect almost every major financial decision you make, whether it’s getting a loan, a credit card, or even negotiating interest rates. Many people only start paying attention to their credit score after a rejection, but by then the damage is often already done.

This detailed guide explains what a credit score is, what counts as bad credit, why it happens, how it affects your financial life, how to fix it step-by-step, and what credit card options exist even with a low score in India.

What Is a Credit Score?

A credit score is a three-digit number that represents your financial credibility and shows how responsibly you manage borrowed money. It is calculated based on factors like your payment history, credit card usage, outstanding loans, length of credit history, and number of credit applications.

Lenders use this score to decide whether to approve your loan or credit card and what interest rate to offer—a higher credit score usually means easier approvals and better terms.

Causes of a Bad Credit Score

Bad credit usually develops due to repeated financial habits rather than a single mistake.

1. Late or Missed Payments

Payment history has the highest weight in credit score calculation. Missing EMIs or paying credit card bills late even by a few days can significantly lower your score.

2. High Credit Utilisation Ratio

If you regularly use a large portion of your credit limit (above 30–40%), it signals dependency on credit and weak cash flow management.

3. Loan Defaults

Failure to repay loans or credit card dues leads to defaults, which remain on your credit report for years.

4. Loan Settlements and Write-Offs

Settling a loan for less than the outstanding amount damages your credit profile more than late payments.

5. Multiple Credit Applications

Applying for multiple loans or cards in a short time results in several hard enquiries, reducing your score.

6. Short or No Credit History

A thin credit file or no borrowing history makes it difficult for lenders to assess your risk.

How a Bad Credit Score Affects You

A poor credit score has both immediate and long-term consequences.

  • Loan Rejections: Personal loans, home loans, and business loans may be rejected outright.
  • Higher Interest Rates: Approved loans often come with higher interest rates.
  • Lower Credit Limits: Credit cards, if approved, usually have very low limits.
  • Limited Product Choices: Mostly restricted to secured or basic credit products.
  • Reduced Financial Flexibility: Emergency expenses become harder to manage.

Over time, bad credit increases the cost of borrowing and limits financial growth.

How to Fix a Bad Credit Score (Step-by-Step)

Improving your credit score is a gradual process, but it is achievable.

  1. Pay EMIs and Credit Card Bills on Time: Set auto-debit or reminders. Even one missed payment can undo months of progress.
  2. Reduce Outstanding Balances: Keep credit utilisation below 30% of your available limit.
  3. Avoid Loan Settlements: Opt for restructuring or EMI rescheduling instead.
  4. Stop Applying for New Credit: Avoid unnecessary credit enquiries while rebuilding.
  5. Keep Old Credit Accounts Active: A longer credit history improves your score.
  6. Monitor Your Credit Report: Check for errors and raise disputes if required.

With disciplined behaviour, noticeable improvement can be seen in 6–12 months.

Can I Get a Credit Card with Bad Credit?

Yes, people with bad credit can still qualify for a credit card. However, the options available will typically be limited to secured credit cards or subprime credit cards, which are designed for individuals with poor credit history.

Secured Credit Cards

Secured credit cards require an upfront deposit that usually acts as your credit limit. This deposit minimizes the risk for the lender. For example, if you deposit Rs. 10,000, your credit limit will be Rs. 10,000. The main advantage of secured credit cards is that they allow you to build or rebuild your credit score over time. By using the card responsibly and making timely payments, you can improve your creditworthiness and eventually qualify for an unsecured credit card.

Subprime Credit Cards

Subprime credit cards, on the other hand, do not require a security deposit but come with high interest rates and additional fees. These cards provide an opportunity for people with bad credit to access credit, but they are more expensive due to the associated charges. If you have bad credit, you should carefully compare your options to find the best credit cards for bad credit that suit your financial needs while helping you rebuild your credit.

What is Considered "Bad Credit"?

A bad credit score typically falls below 580, according to most credit scoring systems. Credit scores are segmented into different categories:

  • Excellent (750 and above): This indicates you have an outstanding credit history and are seen as very low-risk to lenders.
  • Good (700-749): Shows responsible credit behavior, and lenders are likely to offer favorable terms.
  • Fair (650-699): You may still qualify for loans or credit cards, but with higher interest rates.
  • Poor (600-649): Your credit history has issues such as late payments or high credit utilization.
  • Bad (Below 580): Individuals in this range may find it difficult to secure credit or may only qualify for credit cards with high fees and interest rates.
If your credit score falls below 580, you should focus on rebuilding your credit with the best credit cards for rebuilding credit to improve your financial standing.

Can I Get a Credit Card with a 700 CIBIL Score?

Yes, a 700 CIBIL score is considered a good credit score, and you should easily qualify for an unsecured credit card. At this level, you are likely to receive better terms, such as:

  • Lower Interest Rates: Lenders view you as a lower risk, so you may receive more competitive APRs.
  • Higher Credit Limits: You may be granted a higher credit limit due to your strong credit history.
  • Reward Programs: Some cards may even offer rewards like cashback, travel points, or discounts on purchases.
With a score of 700, you can also avoid paying excessive fees associated with credit cards for bad credit and instead opt for premium credit cards with better benefits.

What Are the Best Credit Cards for Bad Credit?

For individuals with bad credit, the following types of credit cards are most accessible:

  1. Secured Credit Cards

    These cards require a security deposit (typically equal to your credit limit) to act as collateral. Examples of popular secured credit cards include:

    • SBI Card PRIME Secured Credit Card
    • HDFC Bank Regalia Secured Credit Card

  2. Unsecured Credit Cards for Bad Credit

    These cards don’t require a deposit, but they typically come with higher interest rates and fees. Some examples include:

    • IndusInd Bank Platinum Credit Card (for people with bad credit)
    • HDFC Bank EasyEMI Credit Card
    • Axis Bank Neo Credit Card (ideal for individuals with poor credit scores)

  3. Store Credit Cards

    While store cards are only useful at specific retailers, they are often easier to qualify for. Popular examples include cards from retailers like Amazon, Walmart, and Best Buy. By choosing the best credit cards for bad credit, you can gradually improve your financial situation and work toward qualifying for better credit products.

Secured Credit Cards and Their Benefits

A secured credit card is a great option for rebuilding or establishing your credit score. Here’s how it works:

  • How it Works: You make an upfront deposit (usually between Rs. 5,000 to Rs. 25,000) with the bank, and this amount becomes your credit limit.
  • Improving Your Credit: Secured credit cards help demonstrate responsible credit usage to credit bureaus. As long as you make your payments on time, your credit score will gradually improve.
  • Minimal Fees: Secured cards typically have lower fees than subprime cards, making them an affordable choice for rebuilding your credit.
If you are searching for the best credit cards for rebuilding credit, secured cards are one of the most effective tools available.

Unsecured Credit Cards with Bad Credit

It is harder to get an unsecured credit card with bad credit, but it’s still possible. These cards typically come with higher fees and interest rates to compensate for the risk the lender is taking. Some of the challenges include:

  • Higher Interest Rates: Credit cards for bad credit often carry APRs upwards of 24%, meaning your balance will grow quickly if not paid off in full.
  • Annual Fees: Many unsecured cards for bad credit charge high annual fees that can range from Rs. 1,000 to Rs. 5,000.
  • Low Credit Limits: Unsecured cards usually offer low credit limits, and you might be tempted to overspend, which can hurt your credit further.
While unsecured cards are an option, secured credit cards are often a better choice when looking for the best credit cards for rebuilding credit since they come with lower costs.

What Fees Should I Watch Out For on Bad Credit Cards?

Credit cards for individuals with bad credit often come with a variety of fees that you need to be aware of:

  • Annual Fees: Many cards have high annual fees that range from Rs. 1,000 to Rs. 5,000.
  • Late Payment Fees: Missing a payment can result in a fee, sometimes as high as Rs. 1,000.
  • Foreign Transaction Fees: If you use your card abroad, this fee can range from 1-3% of the transaction amount.
  • High Interest Rates: Interest rates on cards for bad credit can be significantly higher than those for individuals with good credit, sometimes reaching 24% or more.
  • Over-limit Fees: If you exceed your credit limit, you may incur an additional fee.
When comparing the best credit cards for bad credit, always review the fees carefully to avoid unnecessary expenses.

Will Applying for a Credit Card Hurt My Credit Score?

When you apply for a credit card, the lender performs a hard inquiry on your credit report. This temporarily lowers your credit score by a few points. However, if you’re careful with your spending and make timely payments, your credit score will improve over time.

It’s also essential to avoid multiple credit card applications in a short time, as too many inquiries can be seen as a red flag to lenders. Instead, apply for the best credit cards for rebuilding credit that align with your financial goals to avoid negatively impacting your credit score.

Conclusion

Having bad credit doesn’t mean you can’t get a credit card, but it does limit your options. The best way to improve your credit is by choosing the best credit cards for rebuilding credit and using them responsibly. Whether you opt for a secured or an unsecured card, making timely payments and keeping your credit utilization low will help you rebuild your financial standing.

By researching and selecting the best credit cards for bad credit, you can take control of your credit journey and work toward a stronger financial future.