Bad credit credit cards

After carefully weighing up the pros and cons of applying for a credit card, and searching the market to find the one that’s right for you, you may have finally decided to apply. If you’re then rejected, it can feel like the end of the line for any borrowing plans you had.

It doesn’t have to be though. If the reason you have been turned down is because your credit rating isn’t quite as positive as you’d like, or perhaps you don’t have one at all because you’ve never borrowed, there are still options available to you. You could check out a bad credit credit card, for example. So, what is this?

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What is a bad credit credit card?

As the name suggests, a bad credit credit card is designed for someone with a less-than-perfect credit history. In the UK, there’s no such thing as a universal credit rating that is used by every lender, so there’s no reason that just because you’ve been rejected by one you’ll be rejected by them all. However, most lenders have similar criteria they use to measure borrowers by. You can find out more about what this might include here.

One of the things most lenders will consider when deciding whether or not to lend to you is your credit rating. If you have a long history of responsible borrowing, meaning that you always make a repayment each month, there’s every chance you’ll be accepted for the deal you want. However, if you have missed payments in the past, been late with your repayments, struggled to pay the minimum or had to make use of a debt solution, your credit rating might stand against you. Similarly, if you have no credit history because you’ve never borrowed, the lender you’re applying to may not have the proof they need that you’ll be able to borrow responsibly.

This is where the bad credit credit card may help.

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What is a bad credit credit card for?

It is designed to provide access to borrowing for people with a less-than-positive or non-existant credit history, but it also lets you build up a credit rating at the same time. This may make borrowing easier in the future.

Whether your credit rating has been damaged by your previous borrowing or you’ve simply never used credit, if you want to borrow in the future and have the best chance of getting the most competitive deals on the market, you need to make your credit rating as strong as possible. This is difficult if your current credit rating means that lenders are wary of lending to you.

A bad credit credit card is designed to plug this gap. The providers of these cards understand that the people applying for them do not have the best credit ratings, which means that this isn’t weighted as heavily in their list of acceptance criteria.

If you are already overloaded with debt and struggling to make your payments, you shouldn’t try to get a bad credit credit card in order to borrow more money. If you are struggling financially already, borrowing more won’t help. It makes more sense to seek professional debt help.

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How are they different from other credit cards?

There are so many credit cards on the market, many lenders are keen to take steps to ensure theirs stands out. They might do this by advertising a low interest rate, a high spending limit, or a package of rewards you can enjoy when you spend on the card. However, the best deals are usually reserved for the people lenders perceive will be the best borrowers, like those with healthy credit ratings.

Bad credit credit cards typically come with fewer frills. They may have a lower spending limit and higher interest rate than many of the most competitive cards available, and it’s unlikely there will be any rewards attached. However, the benefit they provide is a means for you to rebuild your credit rating and establish yourself as a responsible borrower.

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How should a bad credit credit card be used?

Like any other credit card! As your primary aim in using the card is to build a strong and healthy credit rating, it’s important you manage your borrowing responsibly.

You can do this by always paying back at least the minimum repayment on time every month. This means you should avoid any charges for missed or late payments, which can show up on your credit report. To make sure you never forget, you can set up a standing order or Direct Debit to your lender for the minimum repayment or any amount above this that you can afford.

To make your card as economical as possible, it’s best to clear the balance in full every month if you can, so that you avoid paying interest. This may mean you have to budget and only spend what you know you can afford on it, but by paying back more than the minimum you’ll pay less interest and clear the debt quicker.

If you have any problems repaying your bad credit credit card, contact your lender as soon as possible. If you’re struggling temporarily because, for example, you’ve changed jobs, they may be able to offer you a payment holiday. And if your affordability worries are more permanent, you may be able to negotiate a new minimum repayment with them.

What you shouldn’t do is ignore the situation and simply start missing repayments. This could mean that the credit card you took out to help you build up your credit rating only makes it worse, and may result in borrowing being even more difficult in the future.

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Know if you're accepted before you apply with QuickCheck

  • Get credit - up to £1,500
  • QuickCheck won’t affect your credit rating
  • Get a fast response in 60 seconds
Check Now 34.9% APR Representative (variable)
Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender

Know if you're accepted before you apply with QuickCheck

  • Get credit - up to £1,500
  • QuickCheck won’t affect your credit rating
  • Get a fast response in 60 seconds
Check Now 34.9% APR Representative (variable)
Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender