Credit cards for bad credit

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Looking for a credit card but you have a bad credit rating? Consider applying for a credit-building card – they can help to improve your credit score.

Looking for something else?

What is bad credit?

Your credit score (or rating) is based on your credit history. A bad credit score could mean that you’ve had a problem with your finances in the past. For example, you’ve made late loan repayments or missed repayments, failed to stick to credit agreements, or you have a County Court Judgement (CCJ) or Individual Voluntary Arrangement (IVA) against you.

It’s almost impossible to escape your credit history because it’s checked every time you apply for credit. But ironically, you can also have a bad rating if you’ve never had credit. While this might seem unfair, if you have no credit history then lenders can’t decide whether you’re a good risk or not. If this is the case, they may decide to err on the side of caution and either not give you credit or give it to you at a high rate of interest.

What is a good credit score?

It depends on the credit agency. There are three main credit reference agencies (CRAs): Experian, Equifax and Callcredit. Whenever you apply for credit, the lender will check your financial history with one or all of these agencies. None of the CRAs hold exactly the same information about you and they all use different scoring methods.

For example, Experian uses a scale between 0 and 999, with anything over 961 being ‘excellent’. Anything below 720 is ‘poor’ or ‘very poor’.

Equifax uses a similar system, ranging from 0 to 900, but anything over 467 is considered ‘excellent’ and under 366 is either ‘poor’ or ‘very poor’.

Callcredit uses a credit-rating system that goes from level one through to level five, with five being the highest.

What doesn’t affect my credit score?

  • Previous occupants of a home Your credit score is specific to you.
  • Partners or flatmates Neither can affect your score unless you’re financially linked to them (for example, you have a joint account).
  • Declined applications Lenders can see when you apply for credit but they can’t see the outcome. However, if you make lots of applications, it does suggest to potential lenders that you’ve been declined multiple times.
  • Income Having a lot of disposable income doesn’t mean you’re assured credit. Typically, it’s not about how much you earn, it’s about how you manage it.
  • Mistakes made long ago Typically, only the past six years of your credit history are taken into account.

How can I improve my credit score?

The good news is that you can improve your credit score. Here are our top tips:

  • Register to vote Being on the electoral roll helps lenders verify your identity. Even if you have an excellent credit score, not being registered to vote can cause delays in getting credit.
  • Close old credit accounts If you have old credit cards that you no longer use, it’s a good idea to cancel them. If you have open credit accounts then, in theory, you could rack up a lot of debt very quickly, which you might struggle to repay. This will act as a red flag to potential lenders.
  • Sever links with poor scorers If you’re financially linked to someone who has a poor credit score, then it will affect yours too, so make sure you close any joint financial accounts no longer in use.
  • Spread out credit applications Although lenders can’t see whether your credit application was successful or not, they can see how many times you apply for credit. If you make multiple applications over a short period, it could indicate that you’re financially in need and lenders might worry about your ability to pay back what you owe.
  • Check your credit report is correct If your application for credit is rejected, it’s worth checking your credit report. Make sure the information held about you is correct; even something simple like a mistyped address could affect your score.

Can I get a credit card with a bad credit score?

You could apply for a credit building card (sometimes called a bad credit, credit card). While this type of card won’t offer you any exciting rewards like vouchers or cashback, it will let you buy things on credit.

Credit building cards have lower spend limits than other cards on the market, so you can’t rack up thousands of pounds worth of debt over a short period. They typically come with high interest rates too. However, the point of the card is to build up your credit rating, so as long as you pay your bill in full each month, then you won’t pay any interest. Plus, if you manage your account wisely, then your spend limit could be raised incrementally.

Because the aim of these cards is to help you keep on top of your finances, providers usually offer services such as free text alerts or emails to tell you when a bill needs paying. Some providers have also partnered up with credit reference agencies to give you easy access to your credit report.

How do I compare credit cards if I have bad credit?

Our comparison tool makes it easy to search for credit building cards. We’ve teamed up with Lovemoney Financial Services Ltd to show you the key features of each card, so you can compare at a glance. We also show you the APR of each card, which is how much your borrowing will cost you. So, get your finances back on track and start comparing today. - the easier way to save

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