Credit Cards for Bad Credit
If you have got a history of bad credit this needn’t be a continual downward spiral. Credit cards for bad credit do exist and they can help you repair your credit rating and get you back on track.
More from Types of Credit Cards
7 January 2009
Credit Cards for Bad Credit
If you are refused credit don’t apply anywhere else because each search leaves ‘footprints’ on your record and can further damage your chances of obtaining credit.”
What is bad credit?
This means that if you apply for a credit card or any other type of financial services product such as a loan or mortgage you are likely to be turned down.
If you have defaulted on a previous loan or hire purchase agreement, or missed credit card payments, or have a County Court Judgement (CCJ) against you, or have been made bankrupt, this all contributes to a bad credit history.
Missing payments on a credit card, even by just one or two days, can adversely affect your credit score. Mortgage arrears are seen as more serious.
When lenders see evidence of ongoing late payments, this suggests that the borrower is struggling to repay month on month and this is more detrimental in the long term.
Check your credit record
If you are refused credit don’t continue applying anywhere else because each credit check leaves ‘footprints’ on your record and can further damage your chances of obtaining credit.
Instead, get a copy of your credit rating and then start improving your profile, which will help you apply for a credit card.
It costs around £2 to look at your credit record. The Data Protection Act 1998 gives you the right to have information on your credit file amended or removed if it is wrong.
It is best to avoid ‘credit repair agencies’ as you can check your details and get any anomalies corrected by speaking to the credit reference agencies directly.
How to get out of bad credit
Check your credit report and make sure it holds the correct information about you.
Don’t feel threatened that providers have information about you that you don’t know about. They don’t – you have the right to see your credit report in the same way that they do.
Don’t apply for several credit cards at once. Apply for one that offers a card for bad credit. If you are turned down look at your credit report to see why and then consider the options.
What can you do if you need a credit card?
There are a number of providers who will consider people with a poor credit history. If you need a credit card it is sensible to stop making numerous general applications for the reasons listed above. Instead, have a look around for one of several providers who target consumers with bad credit. Consider making a call to one of the credit card companies and explaining your situation. We have a list of the companies and the credit cards available on our Bad Credit Credit Cards table.
Higher interest rates
The downside of taking out a credit card with a poor credit history is that you may have to pay a higher rate of interest. In this situation it really pays to shop around, so speak to various providers and see what they can offer you.
One of the ways to combat high rates of interest is to keep your spending down and make a monthly budget. A bad credit record is a difficult situation to be in and if you have access to a credit card it will help if you take control of your spending from the beginning.
Improve your credit rating
Once you have made a budget, plan to either repay the entire amount or make a considerable dent in the balance every month.
Regular repayments will improve your credit score and enable you to look at better rates of interest in due course. The best way to ensure that you don’t miss a repayment is to set up a direct debit as soon as you have opened up the card.
Check your first statement to see if the card provider has taken the amount. If it hasn’t, pay manually and then check with your provider that the direct debit will kick in for the next payment.
See also prepaid credit cards.
