Credit cards for poor credit
When applying for credit, the lending party normally assesses your history to establish your credit score. This may involve reviewing your credit score with information obtained from a credit reference agency. At times, you may receive credit and fail to meet your credit obligations. It may render you not creditworthy in various financial and lending institutions. Your credit scores may fall lower than the expected minimum score such that you get disqualified with credit facilities. When this happens, you don’t need to worry as much. You can still pursue other avenues for obtaining credit. One viable way is through credit cards for poor credit. This article will highlight how you can utilize such channels when you have a poor credit score.
What Are Credit Cards for Poor Credit?
As the name suggests, these are credit cards that you may obtain even your credit status is wanting. It is an avenue that’s opened for those people who due to various factors have a poor credit score. These factors range from income disparities, an unconducive employment status or possibly if you’re a visitor to the UK. Again, it could be because you don’t have a borrowing history or you are just poor in managing credit.
How They Work
Credit cards for poor credit rating are geared to help you manage your credit better. They provide an opportunity for you to rebuild your credit rating positively. Even so, they are issued out on stringent terms. You will go through the regular application, but it will be scrutinized further. You may not enjoy it as much as your credit is curtailed to a certain limit which is usually lower than what the mainstream cards offer. Again, they tend to have a high Annual Percentage Rate (APR) since you are a high-risk customer to the lenders. As compared to the mainstream credit cards, they don’t come with many perks. But in all respects, they may have some utility for you if you really needed credit.
Their payment terms are generally flexible considering that you are in poor credit; thus, they are an excellent avenue for those who want to build their credit positively.
Typically, majority of them offer up to 56 days of interest-free borrowing. This gives you an opportunity to avoid other types of credit that are of short-term nature such as payday loans.
- They can help you redeem a good credit status. This applies in instances where you have a poor credit cards management history. By paying the credit promptly, you’ll have a chance to rebuild your credit rating.
- Are Convenient for Struggling Borrowers. Financial crises may hit even the best of us. If you are really struggling, but you demonstrate that you are capable of repaying the credit, your application may be accepted. It also applies to those who don’t have a credit history, for example, students. They may start building their credit ratings with credit cards for poor credit.
- They offer some level of protection. When making purchases, the liability is shared between the card provider and the seller. This gives you some protection when things don’t go as planned. You can obtain refunds from either the seller or the card provider in case of the unplanned eventuality.
- High APR’s. When obtaining poor credit cards, you are usually considered a high-risk borrower. This leaves the lender no choice but to charge a high APR to mitigate this risk. You could be looking at APR’s of 25% to 50%. Mainstream cards charge up to a maximum of 19% APR.
- Low Credit Limits. Even when you are successful in obtaining such a card, you will be bound by the low credit limits. Again, this is tied to you being a risky customer.
At Bonsai finance, we understand the plight of those who score poorly in credit. We always hold the opinion that you shouldn’t be condemned, but be given an avenue for you to redeem yourself. Reach out to us if you need some sound advice on choosing the best credit cards for poor credit when your credit card score isn’t below minimum levels. Our financial experts are well-versed with these cards; thus, you are best placed to receive some timely advice on the same.
Improve Your Chances of Getting Approval
As mentioned above we can help you to find the most suitable credit card to help improve your credit rating. Allowing us to match you with lenders is the first step towards improving your credit rating.
This is due to the fact that we work alongside lenders who are more willing to offer credit to those with a poor credit rating than not. Did you know that by simply applying for a credit card it can affect your credit score, whether you are accepted for that card or not? Recent searches for credit will show up on your credit file, regardless of whether you were granted the card. If you make many searches and applications yourself and you have no idea whether you will be approved or not, your chances are not as good as when applying with our help. While we cannot guarantee acceptance of a credit card, at least the lenders we work offer a better chance.
To help you gain a better understanding of your credit file you can read about credit scores at Experian.
Improving Your Credit Rating Using Credit Cards for Poor Credit
Once you have been approved for a credit card to help improve your credit rating there are certain things you can do. These include:
- Apply for a balance transfer credit card;
- Be a responsible borrower;
- Clear the balance every month;
- Do not make cash withdrawals on the card.
Apply For a Balance Transfer Credit Card
If you can apply for and be approved for a credit card that comes with balance transfers you can transfer any balance from outstanding credit cards or store cards onto the new card. Essentially as far as your credit rating goes it will show the balances on outstanding cards have been cleared and you only have one credit card open. This will work in your favor going ahead. While having a poor credit rating typically means you will not get the best deals on the market, by looking for your credit card with our help we can match you with lenders offering the competitive deals based on your circumstances.
Show the Lender You Are a Responsible Borrower
You can use a credit card aimed at helping to improve your credit rating by showing the lender you are responsible. One of the best ways of doing this is by keeping well under the maximum credit limit the lender offers. Generally anyone with a poor credit rating will not get a huge credit limit, to begin with, however, the lender may boost this over time providing you repay on time. Having this boost may not be to your advantage as you could be tempted to spend more money. Be responsible and refrain from taking advantage of any boost in credit limit, especially as soon as it is offered.
Pay off the Balance Each Month
There is nothing that says you are a responsible lender more than keeping the balance low and paying it off each month. If you clear the balance each month you will be seen in good stead by the lender and it helps to improve your credit rating. Another bonus is you will not incur huge amounts of interest that boosts up the balance.
Don’t Make Cash Withdrawals on the Credit Card
There is nothing that waves a red flag at lenders more than using a credit card to withdraw money. The odd one in an emergency is all well and good and typically overlooked; however, repeated ones go against your credit file. There is always a fee for withdrawing cash and if you do it repeatedly it screams to the lender that you are desperate to get your hands on money, which is not a good sign.
Contact us, Bonsai Finance; we can put you in touch with lenders offering highly competitive rates on credit cards for poor credit.