It can seem like a chore to obtain your first credit card. Many cards require good credit history and that's often the very thing you need to establish that credit history.

This is a typical scenario for students, young professionals and people who have not had a loan before. Luckily, if you have no history of borrowing, it does not mean you cannot obtain a credit card.

There are steps you can take to start your credit score-building journey, such as knowing what you're eligible for and learning about fixed deposit-backed cards.

Why Is It Difficult To Get A Credit Card Without A Credit History?

When you apply for a credit card, banks typically check your income, financial commitments and repayment track record.

Your CIBIL score provides lenders with an idea of how well you have dealt with borrowed funds. But for borrowers with no prior credit history, they might not have enough information to create a score.

This does not necessarily mean that they are not financially stable. It just indicates that lenders have less information to evaluate the repayment behavior. Hence, acquiring a credit card without CIBIL score is tough with the traditional unsecured credit card applications.

There are secured credit cards available at some banks that are not as reliant on a solid history of credit. These cards are usually secured with a fixed deposit, which provides some security to the lender. You need to make sure that you are aware of the eligibility requirements for credit card applications.

Understanding The Eligibility For Credit Card Applications

Qualification for credit card acceptance is dependent on the credit card issuer and the sort of credit card being applied for. Unsecured credit cards typically are based on your age, income, employment, credit history and any current debt payments.

Requirements may vary for secured cards. The bank may ask you to keep a fixed deposit of a certain amount rather than having a credit score as your main source of financing.

For instance, a person with no credit history may be able to afford a card that is secured by a fixed deposit rather than a high-end unsecured card. But still, approval is subject to the verification process, eligibility and applicable terms of the bank.

Credit Card Benefits That Go Beyond Day To Day Use

Most people think of credit card discounts, cash back and reward points when they think of credit cards. These features are great, but there are a number of credit card benefits that go beyond promotions.

A major benefit is that it's a chance to build up a credit history. If you responsibly use the credit card and the issuer reports your repayment activity to the credit bureaus, your payment behaviour can be part of your credit profile.

Credit cards might also provide a brief interest-free window on qualified acquisitions if you adhere to the terms and conditions for repayment. Other features can include transaction alerts and digital controls and rewards, depending on the product.

But these benefits only come into financial play when you don't take undue loans and know the charges that come with it.

Can a Secured Credit Card Help Improve Your Credit Score?

An FD credit card can be a good way to build your credit score when used properly. Your repayment history is a key factor in determining financial behavior.

For instance, if you make regular payments that are scheduled on your card and pay off the entire statement balance in full and on time, this can help build a positive repayment history. However, if you miss payments or don't pay the balance in full, it will have an adverse impact on your credit score.

It's also helpful to not use too much of your credit limit over and over again. Keep in mind, there is no such thing as a credit card that will have an instant effect on your credit score. It takes time and financial discipline to build up credit.

What To Do Before Applying?

Before choosing your first credit card, understand the complete cost of ownership. Look at joining fees, annual fees, interest rates and late fees. When you're thinking about an FD-backed card, also consider for how long your deposit will be locked up.

Don't set the credit limit too high or you may be tempted to spend more than you need. It's also important to check the official terms of the issuing bank and determine if payments are reported to recognised credit bureaus. Some planning on your part can help prevent problems down the road.

Conclusion

It can be tough to begin your credit journey if you don't have a CIBIL score, but there are alternatives to consider, such as secured credit cards. When you know what is required and make comparisons and repayments on time, you can start to practice good borrowing habits. Explore trusted FD-backed credit card options, compare their features and choose a card that supports your financial needs and long-term credit goals.