card guide
Bad Credit-Credit Cards

In the red and on the blacklist

What is bad credit, how do you become somebody who has bad credit and how does it affect your daily life? How do you get a credit card even if you are on the credit blacklist? There are ways and means…

The cost of credit repair

If you are refused a mortgage, a loan or even a credit card it may be that you are regarded as either a bad risk or that the lender can’t see how they will make money from you, which, when it comes down to it, is the same thing.

But I haven’t done anything!

When you apply for any kind of loan the company you are approaching conducts what is called a credit check. Every time you have enquired about finance it has been recorded on a central database and lenders access this database to see how well you repaid your loans and any other debt management you have exercised.

If you have missed a few payments on a loan, defaulted on a mortgage for whatever reason, or perhaps failed to pay household bills on time, it will be recorded and quite often the criteria lenders use to assess whether you are a good or bad risk will count these things against you.

Squeaky clean

Strangely enough even if you have lived a squeaky clean financial existence and never had a credit card or defaulted on any payments or perhaps you haven’t had a large repayment to make before, this can all sometimes add up to an equally bad risk in the lenders assessment. This is because they have no data on which to assess you; there will be no record of how you may respond to the credit you are now applying for. So they refuse you credit altogether.

A quarter of adults

It’s reckoned that one in four adults have had some form of bad credit rating at some point in their lives. The good news is it can be changed. One way of changing your credit rating for the better is with a bad credit-credit card.

How much!

The problem with bad credit-credit cards is they tend to be expensive. The APR you will normally find on these cards can be up around 30percent.

But as you are determined to improve your credit rating and this is why you have taken out one of these cards it doesn’t really matter because you will be paying off the full balance each month and thereby avoid actually paying the high interest rate…won’t you?

Shop around

It is always worth shopping around for the lowest rate you can get, just in case there is a month or two where you simply can’t pay everything off. And above all, don’t overstretch yourself! Just because you have credit doesn’t mean you have to use it!

Keeping it real and avoiding the debt trap

Once you have your card it is really important to make sure you use it properly. If necessary you should set up direct debits from your bank account well before the payment due date so you always pay off at least the minimum payment each month.

The secret to improving your credit rating is to make regular payments and thereby demonstrate your reliability. But remember, paying off the minimum each month will incur compound interest, (interest on interest) at very high rates too. The last thing you want is to fall into the debt trap.

A capital card

The Capital One Classic Credit Card is currently available to people who have a bad credit rating. As you might expect, it has a limited credit ceiling of between £200 and £2,500, but with time it is likely to increase as you demonstrate good management of your debts. The APR is a whacking 29.9% so you really want to avoid paying interest if you possibly can.

Hopefully a card like this would help you walk away from being amongst this country’s one in four with a poor credit rating.

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Posted on: [ November 03, 2017 ]       Add to Del.icio.us   Digg it   Add to Blinklist   Add to FUrl   StumbleUpon