Balance transfer cards with a 0% interest period can be a good way to pay off debt. But if your credit history isn't great, you might struggle to get the best deals.
Perfect credit history required
Many credit card companies have strict criteria when assessing applicants for balance transfers. This is particularly the case for deals that offer 0% interest for long periods.
The best deals are usually set aside for those with a good credit score. If your score isn’t the best, you may find you don’t get accepted for the headline 0% offer.
If you’ve been rejected for a balance transfer, you may be at a loss as to what to do next, as you could now face hefty monthly interest repayments.
But it's not all bad news. There are plenty of simple steps you can take to improve your chances of getting a competitive deal on a new card.
Limit credit applications
First off, don’t keep on applying for more cards, as multiple applications to several lenders within a short period will show up on your credit profile. This may lead to some lenders refusing you credit.
Check your credit record
Before making any further applications, check your credit record. You can get a free credit report here.
Read through your report and check that it’s both accurate and up to date, as errors may prevent you from getting credit.
Ask for mistakes to be corrected, and for explanatory notes to be added to explain previous problems.
Clean up your credit record
If your credit record isn't looking too healthy, here are some top tips on how to improve your rating:
Register on the electoral roll.
Set up a direct debit to ensure you don’t miss credit card payments.
Cut up any cards you no longer use.
Have at least one active credit agreement in place that you are reliably paying off.
If you've paid a county court judgment off in full, make sure this is shown.
Prove your creditworthiness
You could improve your credit history by taking out a credit-building card. These cards tend to have high interest rates. But if you make small transactions and ensure the balance is paid off in full each month, then this can work to your advantage.
This could prove to the banks you’re good enough to get their best rates, and make it easier to get better products in the future.
Remember that just because you’re rejected by one company, that doesn’t automatically mean you’ll be rejected by the next. Different card companies have different lending criteria.
Although make sure you wait a month or so before trying for a different card.
Also note that if you’re really struggling to get a new 0% deal, a good alternative might be a “life of balance” card, which charges a low rate of interest until the debt is cleared.