Getting a credit card is easy if you are employed and your income is above the monthly income eligibility set by the credit card issuer. This is because before issuing a credit card, banks typically evaluate an applicant’s income to assess whether the individual will be able to repay them or not. But is it possible to get a credit card if you are not employed — what if you are, say, a student, a retired person or a homemaker? Also, can you get a credit card without any proof of income? Read on to find out.
Yes, you can get a standard credit card without income proof
It is not impossible to get a credit card if you don’t have a job or proof of income as credit card providers look for an alternative method to ascertain your repayment capacity. “In the absence of income proof or a salary account, an applicant’s income can be evaluated via surrogate indicators such as the number of loan-account relationships and repayment history from credit bureaus, or the wealth relationship the customer holds with the issuer,” says Sajish Pillai, MD & Head-Assets and Strategic Alliances, Consumer Banking Group, DBS Bank India.
Proof of income is not the only way to understand the repayment capability of a credit card applicant. Banks have multiple ways to check the credibility of a customer who does not have salary-account statements or payslips. “If a customer is a credit-bureau tested customer and has a very good bureau score and an established track record of repayment of other cards or loans for a sufficient time, a credit card issuer may consider the application on merit and issue a credit card basis this track record,” says Shailendra Singh, MD & CEO of Bank of Baroda(BoB) Financial.
Another popular method gaining traction nowadays is the account aggregator framework-based lending. In this format, banks only need consent from a customer to directly get access to the person’s financial transactions such as bank statements, Form 26AS and GSTR-3b for businesses. “Most credit card issuers have built lending guidelines around these methods to underwrite customers without them having to go through the rigamarole of financial documentation,” he adds.
Kotak Mahindra Bank has developed deep analytical capabilities to analyse aggregates of data — like relationships with the bank, spend patterns, Unified Payments Interface (UPI) transactions, credit bureau information, alternative data/score — to underwrite customers, says Frederick D’Souza, Business Head-Credit Cards, Kotak Mahindra Bank.
Many credit providers now have a special process to issue credit cards to people who may not have income proof but possess a robust financial capacity, which can be identified through various surrogate methods. Moreover, there are other special credit card products that are designed to be offered without a proof of income.Secured credit card against FD
If you have invested in a fixed deposit (FD), you can get a secured credit card against it. You do not need to provide your income details to get a credit card against FD. It offers benefits similar to a usual credit card. However, your credit limit will typically be 75%-90% of the FD value, says Dev Ashish, a SEBI-registered investment advisor and Founder of StableInvestor.com. Banks offer credit cards against fixed deposits to those who don’t have a credit history or don’t have income proof. The deposit acts as collateral or security. Banks put a lien on the FD till the customer uses the card.
This type of card can be useful for those who are just starting their career and want to build up credit history. Having a good credit history comes in handy later in life to take home or other loans.
“Customers can choose to apply online or visit a branch and provide the required documents. The bank then assesses the application, and upon approval, customers can either collect the card from the branch or have it delivered to their registered address,” adds Ashish.
You can get an add-on credit card against a primary credit card
You can also opt for an add-on or supplementary credit card without any proof of income if someone in your family has a primary or standard credit card. An add-on card is an additional card issued under a primary credit card. It is usually available for the primary cardholder’s spouse, parents, siblings, and children aged 18 or more. “The primary cardholder is responsible for any debts incurred on the add-on card,” says Pillai.
In the case of add-on cards, the total credit limit is usually shared between the primary and add-on cardholders. A single statement is generated for both the cards. The primary cardholder has the option to earmark a certain percentage of the credit limit to an add-on card linked to his account.
“Since contractually it is the primary cardholder who is liable to pay for the card dues, the add-on cardholder does not have any contractual obligation and hence no financial due diligence other than KYC is carried out for add-on cards,” says Singh.
How can you get an add-on credit card? The primary cardholder has to first check with the bank to know if the service exists for the card. “The next step is to fill out an application form and provide information about the intended add-on cardholder. Typically, income proof is not necessary; however, the customer may need to submit proof of identity and address for the applicant. Once the application is approved, the credit card issuer will send the add-on card to the provided address,” Pillai says.
An add-on credit card could be helpful for students or homemakers. Do remember that these cards do not help the secondary holders build a credit history.
Pre-approved credit cards against savings account
If you have a lumpsum amount in your savings account, you may get a credit card against it. “Your bank may pre-approve you for a credit card based on your transactions in your savings account even without any additional income proof,” says Adhil Shetty, CEO of BankBazaar.com.