How to get a credit card with a bad credit rating
Some people in the UK (an estimated one in five) will encounter problems when they apply for a credit card. This is because they either have had credit problems in the past, or have never applied for credit.
Whenever anyone completes an application for a credit card the first thing the credit card company wants to know is whether the applicant will be a good credit risk. That is will they make their payments as and when they fall due. In order to establish whether the applicant is a good risk the credit card company will carry out a credit search. The credit search (if the applicant has had credit in the past) will reveal the applicant’s credit history and show whether or not they have made payments as they have fallen due on their mortgage/s, personal loan/s or credit card/s. Based on this information the credit card company will then carry out a credit score. Credit scoring is a complex process and each credit card company will have their own models but they are all looking to assess risk based on the information received from the credit search. To credit score they will analyse missed payments and the amount of debt held by the applicant and take other factors into account such as whether the applicant is a homeowner, his marital status or whether he is employed or self employed. Based on this information they will award a credit score which will determine whether they consider the applicant a good risk and what if any credit limit they will impose.
Even if you have never had credit you will still not be classified as a good risk by the credit card company as they have no way of knowing whether you will be able to meet your financial commitments.
So will the applicant still be able to obtain credit even if he has had credit problems in the past or never had any credit at all? The answer is yes. There are a few credit card companies who will offer credit, though the interest rate will be much higher to reflect the degree of risk involved. However, if the applicant ensures that he makes his payments on time he can take steps to repair his credit worthiness so that the credit card company can offer a more competitive rate in time to come.
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