Having bad credit doesn’t necessarily mean you won’t be able to borrow, but it can make borrowing more difficult. Often a bad credit history will mean that you’re accepted at a higher interest rate than those with spotless credit histories would get.
So whether you should apply for a credit card at this time will depend on your individual circumstances.
But before we explore your options, it’s important to understand why your credit history is out of shape. By doing this, you should be able to avoid damaging it further.
Think before you apply
First things first – if you haven’t done so already – you should check your credit history. After all, this is what lenders will look at whenever you apply for any form of credit. You can do this by signing up to the free credit checking services – that’s Noddle, ClearScore and Experian’s CreditMatcher.
Your credit history paints a picture of the type of borrower you are. Lenders will pay close attention to negative marks like late or missed payments, which will be visible on your credit history for six years.
If you’ve already got behind with your repayments, applying for additional credit could put you under financial strain and risk damaging your credit history further if you struggle to afford the payments.
However, if you’re confident that you can make your monthly repayments without fail – maybe your circumstances have changed – a credit card could be a practical way of repairing your credit history.
Likewise, if you have no credit history because you’ve never borrowed, by using a credit card designed to help you build your credit history responsibly you can start to build a good credit score.
Things to consider
To avoid running into financial trouble, it’s important to work out how much spare cash you have each month before you apply for a credit card. This way, you can be sure that you can afford the monthly repayments.
If you do have room in your budget for credit card repayments, when it comes to applying, there are a few things you need to keep in mind.
A good way of starting your search is to check your eligibility before you apply. Remember, each time you apply for a credit card, your credit history will be marked – regardless of whether you’re accepted or rejected.
If you’ve got bad credit, you might get turned down for some credit cards. And if lenders can see multiple applications within a short space of time, they might see you as desperate to borrow and could be more likely to reject you. However, each lender’s criteria are different so not all will take this into account.
That’s why it’s a good idea to use a soft search tool to help match you to products that you’re most suited to – and this is worth doing even if you don’t have a bad credit history. Noddle, ClearScore and CreditMatcher let you check your eligibility without leaving a footprint on your credit history that lenders can see. Many lenders also offer their own soft search tool.
If you’ve got bad credit and the soft search tools show you’re likely to be turned down for credit, it might be worth holding off applying for now and focus on improving your credit score. This could put you in a better position to get the deal you want – as well as meaning you’ll be able to cope better with the credit repayments.