How To Get a Credit Card With Bad Credit
How To Get a Credit Card With Bad Credit
If you have a poor credit history, you might struggle to get a mainstream credit card. But this doesn’t mean you can’t get a credit card at all – there are a number of credit cards designed for people with bad credit.
What is bad credit?
‘Bad credit’ is a term used to describe people with a low credit score. What counts as a low credit score depends on which credit reference agency is being used – they all use different scoring systems.
A low score with Transunion is anything below 565 (out of a maximum score of 710). With Equifax it’s 438 or below (out of 1,000), and with Experian it’s 720 or below (the maximum score is 999).
What can cause bad credit?
You might have bad credit if you have failed to make payments on past credit agreements on time, or if you have fallen into arrears on household bills or your mortgage.
You’ll also be classed as having bad credit if you have County Court Judgments (CCJs) against your name, or if you’ve been made bankrupt.
Some people have ‘bad credit’ because they don’t have much experience of credit – normally because they are young – or because they are new to the UK (credit files don’t move country with you).
Can I still get a credit card with bad credit?
If you have bad credit, you are likely to be rejected for best buy and most mainstream credit cards. But some providers offer credit cards specifically for people with bad credit – these are usually called ‘bad credit credit cards’ or ‘credit builder credit cards’.
If you apply for one of these cards you are less likely to be rejected because of your credit history.
Bad credit credit cards tend to have a high APR and lower credit limit.
How to use a credit card for bad credit
If you take out a credit card for bad credit, you can use it to improve your credit score. This means:
Spending on the card each month
Staying within your credit limit
Repaying your balance in full each month
Never missing a monthly payment
Warning: Credit cards for bad credit come with high APRs. It’s important to pay off your entire debt each month, otherwise high interest charges will add a significant amount to your debt.
How to get a credit card with bad credit
If you have bad credit and apply for a standard credit card you’re likely to be rejected. This can further harm your credit score and make it even more difficult to be accepted for credit in the future.
You can use a credit card eligibility checker to see how likely it is you will be accepted for a certain card before applying. Checking your credit card eligibility can help you to avoid damaging your credit score with rejected applications.
It’s also a good idea to check your credit report. If you spot any incorrect information, you can raise a dispute and fix any errors.
If you decide to opt for a bad credit credit card, shop around and compare the different offers. Some cards offer 0% interest periods for purchases or balance transfers. These won’t be as long as those on mainstream credit cards, but they can still be useful to have. Some bad credit credit cards also offer cashback or rewards, which can be useful.
What if my application is rejected?
If your credit card application is rejected, don’t reapply for another card straight away.
Too many rejections on your credit report in a short amount of time can further damage your ability to borrow. In some cases, you might be better off using your overdraft or applying for a loan for people with bad credit. But make sure you do your research and calculate the costs.
Bear in mind that if you opt for a ‘homeowner loan’ or secured loan, your home could be at risk of repossession if you don’t repay the debt.
How to improve your credit score
Check your credit report and get any errors corrected
Make sure you’re on the electoral roll at your current address
Be careful taking out joint credit agreements with someone else
Never miss a debt repayment
Pay household bills on time
Don’t apply for too much credit
Pay off debts with savings if possible
See if you'll be accepted before you apply
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No impact on your credit rating.
Use your card sensibly — if you don’t make repayments on time or stay within your credit limit you will pay extra charges, forfeit the 0% offer and getting credit in the future may be harder and more expensive.