Viable Options for Poor Credit Scores
By: Matthew Lloyd | Posted: 03rd July 2007
All your financial activity is recorded and stored by 3 UK credit reference agencies. These are:
- Equifax
- CallCredit
- Experian
If you apply for a credit card, then your credit card company will check your record from any of these 3 agencies. It then processes the information in a risk assessment tool which either approves your application as low-risk or alternatively, it assigns your application with a poor credit score.
Reasons You Are Given a Poor Credit Score
You may have a poor credit score or a low credit rating because you have missed monthly payments or made late payments on any of the following, for example, your:
- loans
- credit cards
- APR
- even your domestic bills
- a CCJ, etc.
Check and Verify your Credit Score
Pay £2 to any of the agencies listed above and buy, check, and verify the details of your credit file. Look for errors in your address, or in your application for a credit card, or other miscellaneous information registered in your name.
How to Get a Credit Card Application Approved
If you, somehow, have managed to get a poor credit score, you can get a credit card for yourself. However you may need to –
- pay a higher APR of almost 30%
- as well as a higher annual fee
- do without a balance transfer option
- lower top credit limit of up to £2,500
- take cash advances with up to 25% APR
- frequently, with a higher minimum payment of 3%
As you can see, it is just not worth getting a card with such extortionate APR figures. So what are the alternatives?
Options for People with Bad Credit
You must try and improve your credit score. And the only way to do that is to make your monthly payments on time and clear 100% of the outstanding balance at any cost. Once you get a better credit history, you can negotiate a lower rate for yourself.
But how can you do so if you pay such high APR? Well, consider a secured or a prepaid credit card.
A secured credit card
Sometimes given after the company gets a security deposit. They check your details and then issue a card with:
- high APR of around 30%
- higher repayments of about 5%
Prepaid credit cards
Somewhat akin to debit cards, with a few similarities and differences:
- they may come embossed with a credit card logo
- they may be given to you without a credit check. All you require is some ID for your with your name and address
- you credit the card with an amount, for example £5,000.
Then you can use the card like a regular credit card without paying any interest. Such prepaid cards help you build a good credit history because it gets you in the habit of spending within limits.
Matthew Lloyd writes for About Your Money. His articles provide users with useful advice on a variety of financial products, including credit cards. To find About Your Money visit www.aboutyourmoney.co.uk
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Tags: credit cards, credit card company, credit rating, equifax, loans, cash advances, credit history, late payments, people with bad credit, balance transfer, security deposit, minimum payment, credit reference agencies, credit card application, poor credit score, secured credit card, prepaid credit card, transfer option