Would you lend money to a stranger you met on the street? Of course not because you don’t know if you would ever get your money back.
No bank is ever going to give you a card without checking your credit rating.
What Do You Do Then?
Find out your credit score before you apply for any credit card. This is important because being refused for a credit card lowers your credit rating. If you know the score then you can hold off applying if it is very low.
There are ways to get a credit card even if you have a poor credit rating, and there are ways to boost your credit score, too. These two approaches are the only way to get a card if your current credit rating is poor.
1. Get a Card Aimed at People with a Poor Credit ScoreCredit: http://www.freedigitalphotos.net/
2. Boost Your Credit Score
1. Get a Card Aimed at People with a Poor Credit Score
Most banks have cards aimed at people with a poor or no credit rating.
If you need a card because you need to buy things online then a pre-paid credit card works well. However, pre-paid cards do not demonstrate your ability to handle credit and this is the crucial factor if you are trying to boost your rating. They are a last resort and really if you have made yourself bankrupt, when no credit is available to you at all.
Banks do have proper credit cards aimed at people who have a poor rating. These have low limits and high interest rates, but they are proper credit cards and if you manage one properly for a few years your lenability score will improve.
The low limit should not be an issue because you need to be able to pay off your card every month in any case. The high interest rate will not affect you as long as you pay the card bill in full every time.
2. Boost Your Credit Score
Boosting your score demonstrates that you are a lower risk. Lenders make money by lending, but only if the borrower repays the loan. You have to demonstrate that you can be trusted to repay anything you owe, on time, every time.
Even without credit cards and bank loans we all have utility bills that we pay after we have used the gas or electricity; the utility company trusts us to pay for what they have given us on credit. Either set up a direct debit account or make sure that you pay every bill by the due date.
Saving through regular monthly payments is a great way to show you know how to manage money, even if it is only a tenner a month, set up a regular payment for that amount.
Ironically, borrowing is the best way to demonstrate your credit-worthiness. You need to take out a small loan from your bank over six months and to make all the repayments without any problems. When that loan is paid off take out a larger one over two years and at the end of that time your credit rating will have improved sufficiently that you can get an ordinary credit card.
Make sure you are on the electoral register. That proves that you have a fixed address, immediately making you more trustworthy.
Three Years down the Line
Improving your lending rating takes time, but in three years’ time you will not be limited to credit cards for bad credit, but will have a lot more choice. You should still take out a loan every few years in order to maintain your credit score because you never know when you will actually need a high rating.