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By Sarah Wray Staff Writer
Monday, 21 July 2008 |
Credit Cards for people with Bad Credit History
Why you might be turned down for a normal credit card
- Late or non-payment of bills
- County court judgements
- Not being on the electoral register
- Never having had any credit before
Which credit cards are available for people with bad credit history?
Compare credit cards for bad credit history
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THERE are all sorts of reasons why you might be turned down for a credit card: It could be because you have a bad credit rating, or it could also be because you have never had any credit before and therefore have no credit history at all.
Ironically, the best way to improve your credit scoring in either of these situations is to um….get a credit card and prove that you are using it sensibly.
Anybody spotted the Catch 22 yet? You need a credit card because you can’t get a credit card. Read on quick, before you get trapped in the endless loop of that fun riddle.
The truth is it’s not as easy to get a credit card if you have a low credit scoring, but it’s not impossible either (thankfully!).
Getting a low credit score credit card should be a strategic move to improve your credit rating, not a way to borrow money. And, like any strategic move, it requires research and an informed approach.
Reasons for bad credit
You might have bad credit and need a credit card for a less-than-perfect credit history for a number of reasons, such as: - Late or non-payment of bills
- County court judgements
- Not being on the electoral register
- Never having had any credit before
If you think your credit score has been damaged unfairly, request a copy of your credit report from a credit reference agency.
It may cost about £2 but it will be worth it if you can rectify any errors.
In the meantime…
Compare credit cards for people with bad credit scores
We know that having a credit card and using it wisely is a good way to improve a damaged credit score. That doesn’t mean applying for any credit card going.
Not all credit cards are available for applicants with a low credit score.
It’s best to compare credit cards that are specifically aimed at the low credit score market and then apply for one of them only, because the more credit cards you apply for (and get rejected for), the more of a hammering your credit score will take, and that defeats the object.
Compare credit cards for low credit scores
How to use a credit card for people with a bad credit score
As we said above, using a credit card for people with bad credit can help you repair a damaged credit rating and also help you build one from scratch if you have never had a credit rating before.
Also, although a credit card isn’t essential, having one can be really useful for buying things over the internet, going abroad and registering with sites such as eBay.
In order to rectify any credit difficulties you’re having, you must always pay your bill on time (if we could flash that in pink neon we would) and it is very strongly advisable to pay the bill off in full every month.
Otherwise, your credit rating could potentially get worse.
Credit cards for people with bad credit ratings: Give and take
Those with a low credit score come at a higher risk to credit card companies and so the credit cards come with a much higher APR.
Some standard credit cards have an APR as low as 8.5 %, yet credit cards for people with a low credit score can have an APR as high as 39.9%.
What this higher APR means is that you will pay a lot more interest on any balance you carry on the card, compared to a lower rate card.
That is why credit cards for a less-than-perfect credit history should only be used to rebuild that credit history or to pay for things where a credit card is essential. They should be paid off in full and not used as another form of borrowing.
Use a ‘bad credit’ credit card to show off what a credit card goody two shoes you can be and after about six months you should see that APR falling and those financial doors opening.
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