Credit cards as credit repair tools
In general, the higher your credit score, the cheaper interest rates you will qualify for as a credit candidate. If you have recently been declined credit and are having difficulty, using a credit card can be an excellent way to improve your score over time. Here are some tips on using a credit card as a credit repair tool:
Check your credit rating
Your past history of borrowing is important in determining your suitability for credit, as it provides a way for potential lenders to predict your behaviour by looking at your relationship with borrowing in the past. You may find that if you have a past history of missed payments, defaults or CCJs mainstream (or prime) lenders may not be willing to advance you credit, as the risk on their behalf is too great. Check your credit record to ensure there are no mistakes recorded; if so, apply to have them removed before proceeding;
Bad credit specialists
If you have been rejected from a prime credit card company because of past bad credit problems, consider applying for a credit card from a company that specialises in bad credit applicants. It is important to choose a credit card company that offers you the greatest chance of acceptance in order to avoid the rejection spiral. If successful, you will probably be granted credit at an inflated interest rate in order to alleviate the risk on the behalf of the credit card company;
Use your card responsibly
Use your credit card on a regular basis and avoid interest charges by paying the balance in full each month. Make your payments on time each month; missed or late payments can stay on your credit report for six years, and even just one missed payment may be enough to ruin your chances of switching to a new credit card provider, increasing your credit limit, or even obtaining a loan or mortgage;
Reap the rewards
Over time, your credit score should gradually improve. This takes dedication, but is worth it in the long run, as having a bad credit rating can seriously impede your financial health. Eventually you will be able to apply for credit at more affordable rates and more flexible terms from prime credit card companies. Compare the best rate credit cards >>
To find the best credit cards available for bad credit card companies, use the TotallyMoney credit card comparison tool, which ranks the UK’s best credit cards designed for bad credit applicants.
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