Credit cards for people with poor credit are specifically tailored for those who have struggled to maintain a good credit history in the past. Credit cards for bad credit work the same as those with good credit and are offered by the same providers and operate with VISA and Mastercard. The main difference is that the interest rates are higher than average and the credit limits available are lower in order to manage the risk associated with customer defaults.
Credit cards for poor credit ratings are being offered more and more to accommodate those that have been declined by traditional banks and lenders. Customers will have bad credit if they have struggled to keep up with loan and credit card repayments in the past. Other things that can cause a bad credit rating include making lots of applications for credit and being unsuccessful. For this reason, it makes sense to apply for a sub prime credit card with a greater chance of being accepted based on your credit score.
The best thing about a credit card for bad credit is that it gives the customer the opportunity to improve their credit score. By repaying their monthly credit card repayments on time, the individual will be able to rebuild their credit rating that will allow them to access cheaper products in the future. A customer’s credit rating will always improve the more they can demonstrate their ability to pay on time and a credit card for gives the person with poor credit the opportunity to prove their creditworthiness.
The credit cards we feature give customers the opportunity to obtain credit where they would be have been declined elsewhere. Sometimes people have bad credit and it is not always their fault. Whether it’s because they have a spouse with bad credit, they didn’t go to University or they have no credit history at all, sub-prime credit cards allow these individuals to get the finance they need.
Credit cards for bad credit ratings also provide extra protection offered to consumers by section 75 of the Consumer Credit Act. This law states that customers who make purchases on their credit cards of up to £30,000 will be refunded by the credit card company if the good is lost, stolen, faulty or goes missing. You simply need to make a claim to the credit card company in order to get a refund and this type of protection is not available when using a debit card.
The downside of credit cards for bad credit is that the interest rate is higher than your standard credit card. The reason for the high interest rate is that card providers understand that customers with bad credit are more prone to defaulting on payment and so they need to charge a premium price in order to manage the risk of default. This means that it will be more expensive than usual if the customer is unable to make their monthly repayment. It is important that customers are aware that credit cards with high interest should not be used for long-term borrowing and they must plan how they are going to pay each monthly repayment to ensure that the debt doesn’t accumulate and spiral out of control.
In addition, customers who are approved for a sub prime credit card will be offered a lower credit limit than your average credit card. This might be a disadvantage because the customer does not get as much as they need. However, customers who have a poor credit rating are offered a lower credit limit to ensure that they do not take on too much debt too soon. If the individual has a bad credit rating as a result of failing to keep up with other loan and credit card repayments, it is a sensible thing to limit how much credit they have access to each month. The card provider wants to ensure that the customer uses their credit limit responsibly and does not incur charges by taking on too much debt.
Since credit cards of this nature are usually provided to those who have been declined elsewhere, a new credit card for bad credit rarely comes with introductory offers such as a interest-free periods, money back or loyalty points. By comparison, a standard credit card usually has a lower interest rate, a higher credit limit and provides offers for new customers such as Nectar points and air miles.
At Quiddi Compare, we feature a number of top credit cards for bad credit from the leading providers in the UK. You can compare the different rates and terms using our comparison table above. Once you have selected the best bad credit card for you, simply click on the ‘visit website’ button which will take you directly to the provider’s website where you can apply. We take a small fee from the card provider to ensure that it is a completely free service for our customers to use.
Credit cards for those with bad credit are commonly known as credit builder credit cards. If you make your monthly repayments consistently on time, it will improve your credit rating in as little as 6 months. Whenever a monthly card payment is made, the information is sent from the card provider to a credit reference agency such as Equifax and your credit score updates based on how well you have repaid your debts. So the more your repay your monthly payments on time, the better your credit score will be. By having an improved credit score, you will have a better chance of being approved for future loans and cards and you will be eligible for a better rate of interest. To use a credit-builder card is a good thing because those with a history of good credit are usually able to obtain credit at a much cheaper rate because companies see them as less of a risk of default.
Guaranteed credit cards are those where you will always receive a credit card once you have applied. People looking for guaranteed credit cards are those that are in need for credit and have tried other alternatives. The issuer will take the customer’s credit rating into consideration before providing the card. If the customer has a low credit rating, the credit card will have a low credit limit and a high interest rate if the customer cannot keep up with payments and goes into their overdraft.
Some credit providers may be able to offer a guaranteed credit card if you have used their services before and have a good history of repaying bills on time. In this case, the card issuer will be happy to provide you with a new guaranteed credit card.
Credit cards for people with no credit are hard to find because the card provider will always take an individual’s credit rating into consideration. It is possible to have no credit if you are very young or have never taken out credit before. A good way to build your credit is by joining the electoral roll because it allows card companies to confirm your identity and address. To boost your credit score, you can apply for short-term loans or other credit builder credit cards designed specifically to help you improve your credit rating.
There are also credit cards available for fair credit which allow you to get a better rate and credit limit that those credit cards for bad credit ratings. Fair credit means that your credit rating is in middle and you have a history of missing payments but also making payments on time. It is important to check your credit score regularly to assess what products and rates you are eligible for. There are several credit reference agencies in the UK that allow you to check your credit score regularly for only a few pounds a month. We feature a number of companies that offer credit checks and some of our partners such as Equifax and CreditExpert offer a free 30-day trial.