It could be as simple as you’re not on the Electoral Roll or you’ve not yet built up a credit history – so lenders have nothing to tell how risk-worthy you are.
It might be because you’re self-employed or on a low income.
It could be down to the record of your past dealings with lenders or others. These may include banks, mortgage companies, your landlord, utility company or mobile phone supplier.
It could be because you’ve been a victim of fraud or have a negative financial association with someone – through a joint account for example.
Your credit score matters because it decides whether you'll get accepted when you apply for a new credit card. It also dictates whether you'll get promotional rates and the APR you're charged.
So what are credit cards for bad credit?
It’s important that you check your credit record and understand what's affecting it. One way to improve your bad score is to take out a credit card for bad credit and make regular repayments. These credit cards are right for you if you have a poor, or non-existent, credit record.
What’s good about them?
A lot. If you pay off your balance in full each month and don’t go over your credit limit, your credit score will grow. These cards also offer the same consumer protection as any other credit card. Under Section 75 of the Consumer Credit Act, the credit card company is jointly liable for any breach of contract by the company you’re buying from. So when things go wrong, you’ll always get your money back.
What’s 'bad' about these credit cards?
Only that they charge higher interest rates to reflect the higher risk you have. But they do accept people who would be rejected for a mainstream credit card. And if you pay off in full each month the higher interest rate won’t affect you.
So how can these credit cards help me improve my score?
The easiest way to build credit is to spend a small amount every month and always pay it back in full. It shows you can reliably pay back the money you borrow and will show up on your credit report.
You should never be late on your payments though because it’ll have a negative impact on your credit score. There’s also no advantage to only paying the minimum amount. That will mean you’re paying interest and it won’t help your credit rating.
Keep your credit card active, spend small amounts and pay them off each month. This makes you appear more attractive to lenders. So, in short, it’s best to always pay your whole bill.
How likely am I to be approved?
Everyone’s situation is different and it will depend on your credit file. But there’s a choice of credit cards you can still apply for even if you have a less than perfect credit score.
How does the eligibility check work for credit cards?
At ClearScore, we can help you work out which credit card you’re likely to get accepted for depending on your credit score. To do this, we use a soft search. This means you’ll see it on your file, but lenders won’t, so there’s no impact on your credit rating.
Who can use ClearScore?
Anyone who is at least 18 years old. ClearScore is also completely free to use for everyone in the UK.
Why should I join ClearScore?
We give you full access to your credit score and report for free, forever. There are no time limited trials or hidden costs. This is because we believe that the financial services market should work harder for the consumer. This gives you the facts you need to manage your money and plan better for your future. It also means we can match you with the credit cards you have the best chances to be eligible for.
I've been told I’m ‘pre-approved’ for a credit card?
Maybe you’ve had a letter or email saying you’re pre-approved, but you should be careful. This is basically marketing. The card might not be suitable for you. It doesn’t mean that you’ll definitely get accepted once you complete the application.
The credit card provider is unlikely to have checked your credit file in depth and might be using out-of-date information. Find out here why you should check your credit score before applying and risk getting a hard check on your credit file.
How should I use the new credit card?
Use your credit card for bad credit as a clever tool to rebuild your credit score. Only spend a little each month and always pay back in full.
Don't spend on them unless you’re sure you can afford to repay. If you don't repay, APRs can be high.
If you’ve been lucky enough to get a promotional 0% period, pay the balance before the deadline. Otherwise you'll have to pay a higher APR.
Don’t use them for withdrawing cash. That will cost you interest, even if you pay it off in full.
If you can’t pay the balance, then at least pay the monthly minimum. Otherwise you’ll likely lose any promotional deals, you could be charged a fee, and you may lower your credit score.
How do I sign up for ClearScore?
That’s easy. It just takes a few minutes and a few basic details. Head over here.