Are you struggling with debt, or have done so in the past and now find that when you make applications for a credit card, you keep getting declined? Don’t lose hope, it is still possible for you to get a card even if you have bad credit, as well as start to take steps to build your credit record over time so that you have a greater chance of being approved for a credit card in the future.
Speaking to Payday Bad Credit, we take a look at everything you need to know about how to go forward.
What is bad credit?
When an individual turns 18, they automatically receive a credit score which is a numerical value from 0 to 999 and is a representation of their ‘creditworthiness.’ The higher the score, the better and the idea is that this will be a true reflection on how well you have paid other forms of credit and loans in the past and be a good indicator as to whether you should be approved for a financial product.
Bad credit occurs when someone accumulates a number of missed payments from existing cards and loans and their credit score is in the lower half of the national average. Having bad credit may restrict you from getting access to loans as companies deem you too risky.
Is it possible to get a credit card with bad credit?
In short, yes, there is still an opportunity to get approved for a credit card, but it will depend on your financial circumstances. It is unlikely that you will be accepted by all credit card providers, however there are some companies who provide cards specifically designed for those with a bad credit rating.
As there is a higher element of risk for lenders in deciding to approve you for a credit card if you have bad credit, this means that there may be a number of different stipulations involved when it comes to having these kinds of cards for bad credit that you should be aware of prior to deciding to apply for one.
The Mirror explains that many credit cards for bad credit will commonly share the following features:
- Lower overall credit limits, which set the amount you are able to own on your card at any given time
- Less perks available to those on cards for people with bad credit, such as rewards, cashback and balance transfers
- These types of card are more likely to also have higher interest rates too than other credit cards on the market. This can depend on the provider, but it can be common for the interest rate to be 38%, compared to 18% for the average customer.
Nevertheless, providing that you use the card responsibility, having a credit card specifically when you have bad credit can be a great way to gradually improve on your credit rating, as long as you keep the costs down by ensuring that you pay more than the minimum balance each month (ideally you should pay the entire balance each month) which means you will not have to worry about accumulating interest.
How do I pick the right card?
It is worth remembering that applying for multiple credit cards and the getting rejected by all of them will only worsen your credit score. Therefore if you know that you have bad credit, it would be wise to research the market and decide to apply for credit cards that are more likely to accept you, even if you have any of the following:
- You are unemployed
- You have missed payments that appear on your credit file
- You have been bankrupt or you have CCJs on your credit file
It is impossible for you to check the likelihood of you being accepted for a credit card before applying. This is recommended especially if you have a bad credit history and cannot afford to worsen your score.
