Build Your CIBIL Score Before Your First Job with a Student Credit Card
You may have often heard of the term CIBIL score and why it is so important for working professionals. CIBIL stands for Credit Information Bureau (India) Limited and is one of India’s leading credit information companies, responsible for maintaining and reporting your credit history and performance. But as a student, you may not have taken any car or home loans.
So how do you build your credit history as a student? The simple solution is to apply for a credit card. Yes, you can apply for a credit card as a student as well. Here is a detailed breakdown of how you can build your CIBIL score using a student credit card.
What is a Student Credit Card?
When you apply for a student credit card, it is a gateway into the credit economy. These credit cards usually do not have any joining or annual fees. The IDFC FIRST Bank FIRST WOW! credit card for students is one such card that has no joining or annual fees and zero forex markup fees.
As such, these credit cards can be useful for students living away from home for their higher studies. Whether it is within India or abroad, a student credit card can help you cover all your expenses.
The best part about student credit cards is that they require no credit history or income proof. You simply need to provide your student identification (of your respective institution) as proof.
How Can a Student Credit Card Help?
There are many ways that a student credit card can help you. For starters, it enables you to start building a credit history even before your first job. But besides that, when you as a student, you stand to gain several advantages. Depending on the specific card issuer and variant you choose, these benefits can vary, but highly competitive options may offer features such as:
- Accessible Criteria: No credit history or income proof needed for specific fixed deposit-backed variants.
- Low Cost: Zero annual or joining fees to keep usage affordable on a budget.
- Double Value: Reward points on spending combined with higher interest on your underlying fixed deposits.
- Cash Alternatives: Reward points that can be directly used to make everyday purchases instead of cash.
- Student Savings: Direct discounts and offers across thousands of brand outlets and popular restaurants.
- Fraud Safety: Built-in credit shield protection to secure your account from card theft or unauthorized transactions.
- Flexible Limits: A credit limit offered up to 100% of the total value of your fixed deposit.
- Affordable Travel: Zero forex markup fees that enable you to withdraw foreign currency abroad without extra costs.
Beyond the Basic Benefits of a Student Credit Card
When you choose to process, you may start by browsing different banks that offer them. When doing so, you must be aware of the benefits of such a credit card beyond the standard offers and discounts.
Establishes a credit record |
One of the biggest advantages of a student credit card is that it helps create a formal credit record. Without a credit product, there may be limited information available for credit bureaus to assess. |
Builds repayment history |
Timely payment of outstanding balances demonstrates responsible credit management. Consistently paying dues on or before the due date can positively influence your credit profile. |
Develops financial discipline |
Managing a credit card while studying can help students understand budgeting, spending limits, and repayment responsibilities before entering the workforce. |
Why Start Before your First Job?
It is beneficial to apply for a credit card as a student because it can help you build a strong credit history even before your first job. This means you get the opportunity to avail larger financial products such as four-wheeler, two-wheeler, and home loans.
In some cases, using a student credit card during your high school years can even help you build a credit score that leads to better offerings for higher education loans.
Conclusion
A student credit card can be a valuable tool for building a strong credit foundation early in life. By using the card responsibly and making timely repayments, students can establish a positive credit history before starting their first job. This can help improve their CIBIL score over time. It also encourages responsible spending habits and financial discipline, preparing young adults for future financial responsibilities.