How to Get a Credit Card with Bad Credit
Don't Let Adverse Credit Get in the Way of Securing Finance
Nov 14, 2008
The adverse credit market has grown substantially over the years. Not too many years ago it was impossible for someone who had missed payments or who had a CCJ to get a credit card, but this is no longer the case.
Credit Cards for those with a Poor Credit History
In order to underwrite the higher associated risk of default, financial institutions will charge a premium for lending to those who fall into the adverse credit category. This premium comes in the form of a higher rate of APR which is typically 35%.
Low Initial Credit Limit
Credit card providers understandably offer a more conservative credit limit than to those with exemplary credit. It may be that a new customer is only offered a credit limit of a few hundred pounds, but it is a start.
Improved Credit Rating
Once a reliable repayment history has been established it is often possible to get a higher credit limit agreed to. Achieving this will actually result in an improved credit rating. After a period of 6 years has elapsed adverse credit will be removed anyway meaning that prime credit products are now a possibility.
Companies Offering Adverse History Credit Cards
There are several companies that either offer or specialise in the market for adverse history credit cards. These include: Capital One, Aqua Card and Vanquis. They all judge an applicant on an individual basis rather than setting rigid criteria, but you are unlikely to be able to get credit if you are in a Debt Management Plan, are bankrupt or are in an IVA.
Pre Paid Credit Cards - Available for Everyone, Including Bankrupts
The number of people with very bad credit continues to grow and with it does the number of companies prepared to offer products to assist. There will be no credit limit with a pre paid credit card, but it will have all of the functionality of other cards.
How Pre Paid Credit Cards Work
The first thing to note is that everyone will be accepted, regardless of credit history or status. The new card holder loads money onto the card and only ever spends their own cash - never that of the financial institution. There is a fee for doing this, but no interest is ever paid for reasons already alluded to.
Debt Problems are Not an Issue
The pre paid credit card prevents debt problems as there is no credit limit so no defaults can ever take place. It can be an ideal credit card for use abroad, especially in the United States where credit cards are a way of life. They are also useful for university as they help a student keep control of their finances.
It may have been a surprise to find out that those with bad credit, even bankrupts, can get a credit card but the world is a very different place to what it was a decade ago. Learn from the mistakes of the past and use these cards to build a new, better credit file for the future.
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