If you have been rejected for a credit card, read this guide before applying again. There are credit cards designed for people with poor credit records, or people who have yet to build up a credit rating. Find out how you can get one and how to make the most of it with this guide.
If you’ve applied and been rejected for a credit card, read this before applying again. Blindly reapplying for other cards can make you even more unlikely to be accepted in future as failed applications can damage your credit rating, making it even harder to obtain credit creating a vicious circle of rejection. So, stop and assess why you’ve been turned down and then find the card most likely to accept you. Every card company has their own criteria for lending, so if one rejects you that doesn’t mean they all will. Before you apply again, find out which cards match your profile using our advanced credit matching technology. This clever service will tell you which credit cards you are most likely to be accepted for, without leaving a footprint on your credit record – so using it won’t affect your credit rating. Don’t assume you’ll only get a “bad credit” card (also known as a credit-builder credit card). You may end up being pleasantly surprised. But whatever result you get, use your new credit card to improve your credit rating.
Bad credit credit cards are designed for people who have had credit problems in the past, or have little history of borrowing at all. If you fall into either category you represent an above-average risk to the lender, so you pay for that risk with higher interest rates and fewer special offers. As these cards are expensive, with the exception of the odd 0% introductory offer, they’re not great for new borrowing. But, if used sensibly – that means paying the balance off in full each month - they can help you build up a good credit score. You can find out more about your credit record and how it affects your ability to borrow here, but in short you’re likely to fall into the poor credit category if you have:
A limited or nonexistent credit history.
Past issues like repeated missed payments.
Prior County Court Judgments.
Been declined by several other credit card providers.
They’re a great way to build or rebuild your credit rating.
In some circumstances they can be a cheaper alternative to other forms of borrowing, such as pay-day loans or unauthorised overdrafts.
Many bad credit cards come with useful free purchase protection insurance and all come with Section 75 benefits.
Using a credit card the right way is one of the best means of improving your credit score and, over time, gaining access to better rates and products. Here’s how:
Repay your balance in full every month. Setting up a direct debit is a fool-proof way of making sure that happens.
Stay within your credit limit.
Use the card. An unused card sitting in a drawer won’t help your credit score, you need to flex the plastic, even if it is only to spend a few pounds each month.
Miss your monthly payments.
Accumulate debt you can’t afford to pay off in full. Bad credit credit cards tend to have high APRs so it will work out as expensive, and could lead to you missing a payment and further damaging your credit score.
There’s much more to understanding and building your credit score. For more, read our full guide to improving your credit rating.
If our personalised comparison tool suggests you don’t qualify for any "bad credit" credit cards, don’t despair. There are some alternatives which we will automatically suggest:
These offer some of the benefits of credit cards including, in some cases, the ability to build your credit rating. But you can never spend money you can’t afford as these cards have to be pre-loaded with cash. The drawback to them is that their fees can be expensive.
A secured card works like a normal credit card except that, if your application is accepted, you have to put down a security deposit before you receive your card. These cards are a last resort for anyone who can’t get a normal credit card. They do offer some of the benefits of a standard card including building credit history and access to some credit. When you close the account, provided you haven’t missed any payments and there is no outstanding balance, you should get your deposit back in full. These cards are about building your credit rating. You need to show that you can play by the rules in order for this ‘good behaviour’ to end up on your credit file. You never know. You may even be offered an upgrade to a normal credit card.