Getting a credit card with bad credit «

Getting a credit card with bad credit



Your financial behaviour is always being watched by the organisations with whom you have accounts, credit cards, loans, mortgages or other financial arrangements. If you struggle to pay your bills or default on payments, this will be recorded in your credit report and you may start to build up what’s known as a ‘bad credit history’.

Financial organisations share such information with independent credit reference agencies who are then able to carry out detailed credit history checks on individuals. Financial organisations almost always carry out credit checks before making any financial arrangements with customers to investigate the level of potential financial risk that they pose.

Other financial information will also be recorded in your credit report, such as any county court judgements made against you, council tax or rent arrears or defaults on child support payments. You may also find it difficult to obtain credit if you are self-employed, can’t prove your income or have changed address frequently (making it difficult to trace your financial history).

Some card issuers refuse to provide cards to people with bad credit histories, but there are others who are willing to take such individuals on board. However, the terms and conditions on ‘bad credit’ credit cards are not as favourable as standard packages. This is to help the card issuer because of the higher level of risk that they are taking on. Usually the interest rate is much higher and the credit spending limit is much lower. Some are ‘prepaid’, meaning that you have to have placed sufficient funds in the account in advance of making any purchases. However, if a ‘bad credit’ credit card like this is all you can obtain it’s better than nothing. What’s more, if you use it wisely, staying within your means and repaying on time, it can help to rebuild your credit rating over time.

Watch out for organisations such as debt management companies, which may claim to ‘clean up’ your credit report and get your credit rating back on track. This isn’t true – they don’t have the authority to have your credit report changed. The only way that changes can be made is when they are requested by yourself. You may be able to have incorrect information removed, or a statement may be added to your file explaining why you believe the information is inaccurate. It’s not possible to have accurate information removed.

To find out your credit score and what your credit report says about you, get in touch with one of the credit reference agencies. The main ones are Equifax and Experian. If you are unhappy about anything on your credit report and are struggling to deal with it, consult the Financial Services Authority, the government-run regulatory body for the financial industry, who may be able to help you.

 

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