A poor credit score can cause a myriad of financial problems in your life, such as prevent you from getting the home or business loan you need or force you to pay higher interest rates on other debts. In certain cases it can even prevent you from getting the job you applied for. This makes it all the more important to understand your credit score and check it ever so often to make sure you are in good standing.
However, sometimes life hits you hard and one mistake leads to another, which can end up damaging your credit score. There are ways to rebuild your credit score, and opening up a new credit card account is just that. Credit card companies even have specifically created cards for individuals with poor credit scores.
What Is A Credit Score?
In the UK, your credit score is a number that reflects how trustworthy of a borrower you are and lenders will take this into account when deciding to approve you for new lines of credit. There are three main Credit Reference Agencies (CRAs) that are responsible for tracking your credit score depending on how well you pay off your debt. Those three CRAs are Equifax, TransUnion, and Experian, and they will provide you a credit report that includes information like your name, current and previous home addresses, current credit accounts, public decree information like County Court Judgements or bankruptcies, electoral registry, previous fraud or stolen identities. Banks or credit card companies aren’t the only people who might take a look into your credit score. Employers, landlords, mail order companies, or telephone companies also might check your credit to see if you are trustworthy for them to write you a contract or employ you.
How Can Credit Cards Help?
While there are many ways you can build your credit score, credit cards are an easy and simple option. Lenders like to see you have multiple credit accounts since it shows that other lenders trust you and it lets you start writing your payment history (which is absolutely crucial in determining your credit score). When you open a new credit card account, you’ll have to start paying it off and lenders will keep track if you’re paying on time. If you’re responsible and regularly pay your credit card bills, your credit score will improve and the longer the payment history you have, the better.
What Should You Keep In Mind For When You Apply?
There are a lot of different credit cards out there, and a lot that are made especially for individuals who are looking to improve their low credit scores. You will want to keep these factors in mind when you’re applying for a new credit card to rebuild your credit.
1. Credit Score Requirements
Before you apply, you should check if the particular credit card requires you to have a high credit score. There are plenty of cards out there that allow low or poor credit scores, and there’s even some cards that don’t even look at your credit score. These credit cards are made for people who are trying to rebuild their credit or even just starting out with their first card. We recommend the Aqua Classic Card or the Barclay Forward Credit Card, which both only require a low credit score to apply.
2. Allows History of Bankruptcies
Other credit cards out there might not approve you if you have previous bankruptcies in a certain given time frame. You’ll want to check if the card you are applying for has this requirement. The Fluid 9 Month Balance Transfer Credit Card does not allow any previous reported bankruptcies within the last 18 months, which is a longer time frame give compared to others. The thinkmoney Credit Card doesn’t take previous bankruptcies into consideration.
3. County Court Judgements (CCJ’s)
You can get a CCJ if someone like a bank or lender takes court action against you, saying that you owe them money. CCJ’s can stay on your record for up to 6 years. Certain credit cards out there will not accept your application if you have CCJ’s on your record. You’ll want to keep this in mind and check if the credit card you want will allow CCJ’s. One credit card that allows past CCJ’s is the Luma Classic Credit Card.
4. Other Recent Credit Card Applications
If you apply too frequently or recently applied but was not approved for a credit card, this is a red flag to credit card companies. It indicates that you might not be in the best credit standing and not a trustworthy borrower. Some credit cards will state that they will not approve you if you recently applied for a credit card with a different bank or company. Be sure to check if the card you plan on applying to allows previous applications. One credit card that does this is the Fluid 9 Month Balance Transfer Card, which will not approve you if you have applied for a Marbles, Opus, or Aqua Card within the last 12 months.
There are many credit cards out there that can help you rebuild your credit score. Not all credit cards require you to be in good credit standing, but it’s important to remember that you have to be diligent about paying your bills on time. In the end, it is your financial responsibility that determines your credit score.
Resources:
1. https://www.money.co.uk/credit-cards/bad-credit-credit-cards.htm?track=885076&gclid=EAIaIQobChMI-aGX0c_44gIVjsBkCh1K_gZzEAAYASAAEgJ-QfD_BwE
2. https://www.uswitch.com/credit-cards/bad-credit-credit-cards/
3. https://www.gov.uk/county-court-judgments-ccj-for-debt
