Factors to consider before applying
Whether you should apply for a credit card depends on your own circumstances, but you can consider these five questions before you go any further.
1. Do you need a credit card?
Ideally, credit cards should only be taken out for short-term borrowing to pay for things like a broken boiler or car repairs, for example. Or to help rebuild your credit rating.
Consider your reason and whether you need to take out a credit card, or if the purchase you want to make is non-essential and could wait until another time when you have the funds available.
If you want to take out a card to rebuild your credit, ensure you’re in a position to stay on top of your repayments, as not doing so will harm your score further.
2. What is your credit history like?
If you haven’t done so already – you should check your credit report. This is one of the things lenders look at when you apply for credit. You can do this for free with the three main credit reference agencies in the UK: Experian, Equifax and TransUnion. You can also check your Equifax credit report for free (for life) with CredAbility.
Your credit report includes your credit history, which paints a picture of the type of borrower you are. For instance, if you have a good payment record, lenders are likely to see you as low risk, which may encourage them to lend to you.
On the other hand, any negative markers, like late or missed payments, could indicate that you are high risk, which may put some lenders off.
If you have bad credit you may want to work on improving your credit score before you apply. Or consider a lender who provides finance for those with less-than-perfect credit.
3. Can you definitely afford the repayments on a credit card?
If you’ve fallen behind with your debt repayments already, applying for additional credit could put you under more financial strain. So, it’s important to think about your options carefully to make sure you only apply for a credit card if you can afford the repayments.
Remember, if you miss any payments, pay late, or less than the minimum amount, it will show on your credit report for six years and late fees may apply. Negative markers can also reduce your credit score, which may affect your ability to get finance in the future.
Ideally, you should aim to pay the balance off in full each month to avoid any interest and charges - and to boost your credit score.
4. Have you made any recent credit applications?
If lenders can see multiple applications within a short space of time, you might appear desperate to borrow, so lenders could be more likely to reject your application. However, each lender follows their own criteria, meaning some may place less weight on certain factors than others.
5. Are you eligible for a credit card?
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.
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 - without leaving a footprint. This is worth doing even if you don’t have a bad credit history. It means that you can with confidence for the credit cards that you are eligible for, with less chance of being rejected.
Our eligibility checker is called QuickCheck and will tell you if you’re pre-approved for the Ocean card without harming your score at all.
What credit card options are available with bad credit?
Whilst your options may be limited, you may still be able to get a credit card with bad credit. Each lender uses their own criteria, and some have lower thresholds than others. Though there are no guarantees, of course.
If you’re confident that you can make at least the minimum monthly repayments without fail, a credit card could be a practical way of repairing your credit history over time. We look at some of the options available if you have bad credit.
Your eligibility will depend on your individual circumstances and the lender’s criteria.
Credit builder cards
These work just like regular credit cards, but they’re specifically designed for people with poor credit, due to a damaged or thin credit history. So, they tend to come with lower eligibility thresholds.
If you always pay the balance on time and stay within your credit limit, then a credit builder card could help to gradually boost your credit score. In turn, this should improve your chances of approval - and help you gain access to lower interest rates in the future.
Bear in mind, they usually come with lower credit limits and higher interest rates than traditional credit cards.
Improve your credit rating with Ocean Finance
- Up to £1,500 credit limit
- Quickcheck won't impact your credit rating
- Check your eligibility in 60 seconds
Intelligent Lending Ltd (credit broker). Capital One is the exclusive lender.
What’s the reason for your bad credit history?
Before even considering taking out a credit card, it makes sense to look at your credit history to identify areas you could improve on.
A bad credit history could be caused by a few factors, such as:
- missed or late payments
- multiple credit applications made in a short space of time
- defaults and County Court Judgements (CCJs)
- relying too much on an overdraft
- having a high level of debt
- not having any credit
Read on for more information about what affects your credit history.
Quick fixes to improve your credit score
If you’ve got bad credit and the soft search tools show you’re likely to be turned down for finance, it might be worth holding making an application, and focus on improving your credit score instead. This should put you in a better position to get the deal you want in the future.
Here are 5 quick ways you can improve your credit score:
- add your name to bills to build up a credit history
- register to vote so lenders can verify your identity
- set up direct debits so you never forget to make a payment
- use savings to reduce your debt
- join the Rental Exchange Initiative, so your rental payments appear on your credit report
Read on for more information on how to improve your credit score in one day.