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Ciara O

Credit card options for those with a poor credit history

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It’s relatively easy to acquire a poor credit history, and the poor credit rating that goes with it.

Piles of credit cards

What can cause bad credit? 

Before you go about fixing your credit history, it’s important to know where you went wrong in the first place. Here’s a couple of common reasons:

  • It’s not just a question of failing to pay your domestic bills, credit card, rent or loans – it could be a question of failing to pay them on time.

  • Not being on the electoral roll can go against you when applying for credit.

  • Unsurprisingly, a county court judgment (CCJ) against you will adversely affect your credit history.

  • Regularly using payday loans, or cash advances on your current account, can be detrimental when applying for credit. This is because lenders might think you rely on them.

  • Poor credit or no credit

    You may not necessarily have poor credit, but having little credit history can also go against you. 

    Those who’ve never borrowed can find it just as difficult to obtain a credit card as someone with bad credit history.

    Managing your finances well and having savings in the bank proves little to a lender.

    Credit lenders want to see evidence of timely repayments. If you find yourself struggling to build a credit history then you might want to consider getting a credit-building card

    These cards can be a helpful way to rebuild your credit score. 

    What’s a credit-building credit card?

    These cards are designed to help both first-timers who never had credit, and those with past credit issues. 

    If used correctly, they could successfully build or rebuild your credit score.

    It’s worth noting that cards like these attract a higher interest rate. It’s not uncommon to see rates as high as 34% and above. Some cards will also have an annual fee.

    But bear in mind that if you repay any credit purchases on the card before they’re due, you can avoid interest charges altogether. 

    After all, you want to build your score, not make a further dent in it.

    The money lender’s risk

    Handing a card over the counter

    Credit card companies make an assessment that someone with a poor credit history pose a greater financial risk. 

    Because of this uncertainty, an attempt is made to mitigate the risk of financial loss by imposing higher charges all round.

    Lenders use your credit history to determine how much of a risk you are. If you’ve had previous credit arrangements and have paid them in time, then you’ll be seen as a better risk.

    This is exactly why people who are new to credit get the same offers as those who’ve struggled with credit previously.

    There are risks in applying for cards. But if you stick to paying your bill in full each month, and avoid building up debt elsewhere, you should improve your credit history. 

    This will increase your options further down the line, for example if you wanted to apply for a mortgage.

    If you’re unsure as to which card is best suited for you, or if you’ll be accepted, you can try our free card matcher tool

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