A simples guide

Credit cards for bad credit

We’ve all been there, you’re simply applying for a credit card when…computer says no. When it happens again and again, it gets harder to brush off as a computer malfunction. So why is this happened and how can you fix it?

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Feeling unloved?

Sometimes it’s not personal. There are many reasons why you might be refused credit, some of them will be easily fixed, some of them might not even be your fault and the others? Well – let’s just say, we’re here to help and to start with you’ll need to know why you’ve been rejected in the first place.

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How’s my credit score calculated?

There are three main credit reference agencies that all credit checks go through: Experian, Call Credit and Equifax. They all hold information about you that potential lenders use in order to make a decision about whether you’re a good candidate to loan money or give credit to. Like any organisation that store data – not all of that data will be 100% accurate or updated regularly and in a credit check every detail matters. For example they may have old data about you, such as accounts that you’ve since closed, previous addresses, and associated you with people you’ve previously shared an account or address with.

You can check your credit report with each of the agencies. Experian and Equifax offer free 30 day trials where you can access your report at no charge (just make sure that you cancel before the end of the trial or you will be charged). Call Credit offer a free service so you can check your report as many times as you like.

Check your file for any mistakes such as old addresses or whether you’ve been shown to default on a payment when you know that you haven’t. You should also check whether any previous partners are still showing as linked to you financially because their credit history will affect yours too. If you find any information that isn’t correct you can challenge it with the agency.

You might also be rejected simply because you’ve never had credit before, in which case your credit history will be almost non-existent – another reason why lenders can’t gauge if you’re a good customer or not. 

I just have a bad credit history, what can I do?

The important thing is to not apply for multiple credit cards in the hope that one will accept you, because any rejection you get, will be listed on your credit report. But if you really want a credit card, then you can turn a bad thing good by considering one of the available bad credit cards – sometimes known as credit builder cards.

What are the benefits of a bad credit credit card?

Cards for bad credit offer a way to build up your credit rating while still allowing you the benefits of having a credit card. Other benefits will vary according to who’s issued your card, but here are some benefits you might want to look out for:

- Flexible payment dates so you pay on a date that suits you

- Text alerts so you never miss a payment

- Credit limits that increase if you manage your credit well

- Gradual lowering of interest rates if you manage payments

- Free ongoing access to your Experian credit report (the largest of the credit reference agencies)

…and the drawbacks?

Most credit cards for bad credit come with very high interest rates. But as you’ll be paying off the bill in full every month you shouldn’t let that put you off (but make sure you only spend what you can afford and make the payments each month or your credit score won’t improve).

The credit limits also tend to be lower on credit builder cards too which means you probably won’t have lots to spend on big purchases, but it will see you right for your day to day needs.

What else do I need to do?

There’s only one thing you need to do to ensure that your credit rating gets back on track and that’s pay your credit card bill every month, in full.

So start comparing cards for bad credit using our comparison service now and find the card that’s right for you.

 

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