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Credit Cards for Poor Credit History

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Credit builder or bad credit cards

In the past, lenders were criticised for giving out credit too frivolously to people who were unable to make repayments, already had other large credit commitments or were at risk of building up debts so big, it was impossible to cover on their income. Since the recent banking crisis, lenders have turned a full 180 degrees and are considerably tighter with their conditions and stipulations for lending, meaning that people with a less than perfect credit rating often find it difficult to even get credit, let alone the best deals. As a result, many lenders have introduced cards known as ‘bad credit’ credit cards or ‘credit builder’ cards.

Low score doesn’t always mean risk

Having a low credit score doesn’t necessarily mean you are a ‘credit risk’ and missed payments or defaulted on loans. If you are self-employed, work part time, on a low income, not on the electoral role or simply haven’t had credit before, you can have a low credit score. Lenders look at your credit score to access the risk of lending to you and ultimately to ensure the money you borrow is paid back. If for whatever reason you find yourself with a low credit score, you should still be able to find a credit card for you and providing you use it correctly, it can help build your rating.

Credit cards for poor credit

Added benefits to having a Credit Card

Paying for items on a credit card can have added benefits than if you pay by cash or debit card. Most items over £100 are covered by your lender, so if you buy a new sofa and the company goes bust, unlike if you had paid with cash or debit card, with a credit card you know your purchase is covered. You may also get extended warranty on certain electrical items and many cards nowadays offer cash back on purchases. If you use your credit card wisely and make sure the balance is paid off in full every month, you can start to rebuild your credit rating and stand you in better stead of better deals on offer in the future.

Beware high interest rates

Credit cards for people with bad credit often have very high interest rates, so if you are needing a card because you are short on cash and in effect robbing Peter to pay Paul, you may want to look at other budgeting options to avoid slipping further into debt. Falling into the trap of only making minimum repayments can leave you paying off a small balance for many years and thousands of pounds in added interest. Credit cards can be one of the most expensive forms of borrowing so should be used wisely! However, if you are able to ensure the balance is paid off in full each month, you will be able to avoid interest charges and still reap the benefits of paying by credit card. You should still compare interest rates and deals, just in case you can’t make a full repayment one month and as the market is becoming more competitive, some may still have some good deals on offer.

Too many credit checks damage your rating

Remember that each time you apply for credit, you will be subject to a credit check which alone can have an adverse effect on your rating. Asses why you have bad credit in the first place; do you need to budget more efficiently and avoid further debt or do you need to build up a good rating for future requirements? Debt is easy to get into but much harder to get out of, so think long term when deciding if another card is for you.

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About Rebecca Robinson

About Rebecca Robinson

After spending the last 8 years juggling life as a mum of two, wife and working full time as a Project Manager for a global telecommunications company, Rebecca Robinson made the decision to follow her love of writing and took the plunge; turning her passion into a full time career. Since becoming a full time writer, Rebecca has worked with various media and copy-writing companies and with the ability to make any topic relevant and interesting to the reader, now contributes to The Working Parent on articles ranging from credit cards to teenage relationships. Ever the optimist, Rebecca's dreams for the future include a house in the country filled with children, dogs and horses in the field!

Website: Rebecca Robinson

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