Rejected again? It’s hard to feel optimistic when your credit card application has just been turned down.
If this keeps happening to you, there could be a problem with your credit history. But the good news is that bad credit doesn’t always last forever.
Read on to find out what you can do to improve your credit score, and what credit cards are available to you in the meantime.
What is bad credit?
When you apply to borrow money or take out a credit card, lenders check your credit history to assess the likelihood of you paying them back.
These credit ratings are a mystery to most of us. The scoring systems are complex, and they vary from one company to the next. There’s simply no second guessing which applications will be accepted, and which won’t.
But there’s one important principle: you’ll be treated as a higher risk if you have a bad credit record. And that might make it harder to borrow money, especially at lower rates.
What affects my credit record?
Your record can be damaged by a range of factors, including failing to stick to credit agreements, missed or late repayments, bankruptcy, County Court Judgments (CCJs) and Individual Voluntary Arrangements (IVAs).
But there’s more to it than that, a lack of credit history will also work against you. If you’ve never borrowed money, lenders won’t know whether you’ll be good at paying it back. With nothing to go on, they could reject your application for credit regardless of if you can comfortably pay it back.
Even if you borrow small amounts, providers might still be put off, as theymight see you as an unprofitable customer to them. We told you it was complicated!
What doesn’t affect my credit record?
Bad credit can be difficult enough to get your head around. So you don’t want to be worrying about things that actually have no impact on your credit score. Let’s deal with a few common credit myths:
Your credit rating is specific to you, so won’t be influenced by previous residents at your address (unless you happen to share a financial connection with them).
Partners and flatmates
Your score can’t be affected by people you live with either (again unless you’re financially linked to them with a joint mortgage, credit card or bank account).
While an application for credit does go on your record, the outcome doesn’t (just remember lenders can see how many times you apply, so apply sensibly).
What can I do to improve my credit score?
Check your credit records
Find out what’s holding back your chances of getting credit. You can obtain your statutory credit report from the three main credit reference agencies (CallCredit, Equifax and Experian). It might be worth checking all three– as they’re unlikely to be identical – and let the agencies know immediately about any mistakes you spot.
Register to vote
Yes, you read that right. If you're not on the electoral roll, you couldfind it difficult to borrow. Your local authority should be in touch annually to check that every eligible person in your household is registered – or you can register online any time you like.
Think before applying
Although, as we said above in point 3, the outcome of your credit card applications don’t show on your record, every credit application you make does go on your file. Regardless of the outcome, if lenders see several applications in a short period of time, they may assume you’re in financial trouble. As this could affect your chances of getting credit for several years, only apply for credit if you really need to.
Close old accounts
How much credit you have available is important to finance providers. If you have several credit cards on the go, you could theoretically take on a lot of debt very quickly. This might put lenders off, as it would affect your ability to repay. So make sure you close down any lines of credit you no longer need.
What credit card can I get with bad credit?
It takes time to rebuild your credit score. It’s not something you can achieve overnight. So in the meantime, you might be asking: what credit card can I get with bad credit? Which is the best credit card for someone in my position?
Well, you’re unlikely to be offered any zero percent credit cards or zero balance transfers. But many financial services firms offer products designed specifically for people with poor credit ratings. They’re mostly known as ‘unsecured credit cards for bad credit’, ‘credit-building credit cards’ and ‘bad credit, credit cards’.
These tend to have lower credit limits and higher interest rates than traditional credit cards. But credit cards for bad credit can be helpful in two ways.
Firstly, they’re easier to obtain than standard credit cards. And secondly, they can help improve your credit score by showing you can pay off the debt. But a word of warning: use them sensibly.
Keep up to date with your minimum repayments. Or if you can, pay off the full balance each month – that’ll help repair your credit score faster, and prevent you from being charged interest.
How can I find a bad credit credit card?
Now that you’re armed with the facts, you’ll probably be asking yourself: which credit card is right for me? Which credit card is easy to get? Which credit card will accept me?
We can help you find out which credit card is best for you. Hit the green button above to begin comparing unsecured credit cards with comparethemarket.com. We’ll list out your options all in one place.
Find out which credit cards are available to you today with comparethemarket.com.