How to get a credit card if you have a bad credit rating
When you have a history of bad credit, many credit doors are closed to you, especially credit cards. Today, credit cards are among the most-needed credit types but one of the most difficult to acquire. People with bad credit tend to find fewer options due to credit companies perceiving you as high risk. However, there is no need to despair. Having a bad credit rating is much more common today than it was even ten years ago and there are things that may affect your credit rating other than debt.
Credit cards are not closed to you forever, it is possible to get a credit card when you have a poor credit rating.
Stop applying for regular credit cards
The more you apply for and are rejected credit, the higher your chances of future rejections. Regular credit cards with those enticing money back offers, air miles and other perks, are simply not open to you for the time being. The more you pursue it, the lower your chances of obtaining any credit card. This is because your credit score drops, and your failed application appears on the record. It is advisable to get hold of your credit score so you may see where you are going wrong. Some offer a free eligibility check. There are many things that impact your credit score and understanding what will help you begin to repair it.
Look at credit cards for poor credit
Now you have ignored the regular credit cards, it’s time to search for credit cards tailored to people with a low credit score. Don’t worry, because you will find plenty of choice here; it’s not the taboo it once was. Look at your range of options as such cards come under different names and with different features and perks. If you search and apply for cards advertised as for people with poor credit, your chances of a successful application increase. Don’t forget the free eligibility check before completing your application too.
What do you want to use the card for?
This is one of the most important considerations. Which credit card for poor credit would best suit you depends almost entirely on the credit card’s intended purpose. The most typical reasons include:
- Spreading the payments of the weekly shop and paying the bill interest free at the end of the month
- To spread the cost of travel. Late deals don’t tend to allow people to put down a deposit and settle the balance later. A credit card is a cheap and easy short-term way of doing this when you don’t have the cash but can definitely afford it
- Spreading the cost of large bills that require immediate settlement and where costs cannot be spread, such as car or home repairs, a cheaper option than a short-term loan and not as complex or as slow to apply for
- Increasingly, some businesses require a credit card for deposits such as car hire or opening a tab at a restaurant, even if the card will not be used to settle the bill.
Consider all of these uses before making a decision as some cards are better suited than others.
Are there different types of credit card for poor credit?
When you first begin your search for a credit card designed for people with a low or no credit score, you’ll notice several things. Most of these types of card have lower credit limits (typically under £1,000) and slightly higher interest than other types of card. So long as you keep on top of payments, this will not be a problem. Clearing the balance every month means you will never pay a penny in interest. There are two broad types.
Secured credit cards
This is common among credit cards designed for people with poor credit. Here, you will need to put down a cash deposit or property against the credit card loan as security. A mortgage is a secured loan, for example, as is hire purchase. The principle here is similar. Although you may not be asked to offer something as substantial as your home or car against the credit card, a deposit of some kind is required.
Unsecured credit cards
This is the most common type of card. It simply means that you don’t put up property or cash as collateral or a deposit as security against payment. You take out the card and use it to manage your money. In the case of credit cards for poor credit history, you may find there are extra considerations.
- The credit limit might be severely restricted, for example, to limit the risk of a default
- The card may have (as well as or in place of the low credit limit), a high interest rate
- An annual fee added to the card’s cost once per year
If you have a bad credit rating, there is no need to despair. Have a look around at the many tailored credit cards for people with a poor credit score.