If you have failed to comply with the terms and conditions of any of your credit agreements during the last six years, this information will have been passed to credit reference agencies. This means that your days of getting a low credit card rate are over for the foreseeable future. However, you may be able to get an adverse credit card from a specialist poor credit issuer.
What are credit cards for poor credit?
Why is bad credit a problem?
When you have been declined for credit elsewhere, this is normally due to your credit score. Issuers are not prepared to offer you credit because they are concerned that you are going to default on the agreement. However, if you are willing to accept the fact that you will need to pay extra for the opportunity to borrow money, there are issuers who are prepared to offer you a card. You should expect to pay additional charges and a higher rate of interest in return for a lower credit limit.
Types of credit cards for bad credit
Unsecured credit cards
The card may be the same as you are used to having in your purse or wallet. However, you will not get the best card credit rate and you will normally be expected to pay several upfront charges. Although issuers will report timely repayment to credit reference agencies, you will only be offered a $300 credit limit. If you exceed your spending limit, you could do yourself more harm than good. You may qualify for a higher limit in the future, but you will need to manage your account responsibly for the next 6-12 months. Secured credit cards
Although the credit cards APR will not be hugely different to an unsecured card, the main benefit is a much higher credit limit. This is not because the issuer is more generous, it is because you are securing your debt with a cash deposit. The larger the amount you deposit into the issuer's account, the higher your spending limit. Given that most credit experts agree that you should not use more than 30% of your limit in a single month, this is one of the most effective credit-building credit cards. Pre-paid credit cards
If you have found it difficult to manage your financial obligations in the past, a pre-paid credit card could help you. You transfer money to your card by bank transfer and are free to spend it as you wish. Unless your card displays the credit builder symbol, it will not help to rebuild your credit history.