What is a credit card for bad credit?
Credit cards for bad credit are made for people who want to improve their credit score.
A good credit score is helpful if you want to get a new loan, credit card or a mortgage. Often you might find that your credit score doesn't put you in the best position before applying for a product, and this means you may not have as much choice.
A bad credit credit card offers a way of building your credit score over time. These cards often come with a low credit limit and a high interest rate. Using your card correctly will help to improve your credit report. This means never missing a payment and never going over your agreed credit limit. If you manage your credit card well over time your credit score could improve.
Whatever your reasons for wanting to boost your credit score, we’ll explain how a Vanquis credit card can help with building your credit score. We'll explain how.
What is bad credit?
‘Bad credit’ is a term used to describe a low credit score. This could be because of a credit history that includes missed or late payments on credit products. It could also include if you have defaulted on credit agreements altogether. 'Defaulted' here means a credit agreement that has been broke. In some cases you may have been through bankruptcy or had a County Court Judgement (CCJ). Having bad credit can make it more difficult to get accepted for a loan or credit card.
If you’ve never taken out any form of credit or have managed it badly, then you are more likely to have a low credit score. This also means you might find some lenders may decline your credit application. If this is the case, it might be worth looking at credit cards for bad credit as a way to help rebuild your credit score.
A bad or poor credit score
Your credit rating is based on several factors. These include your employment status, your previous credit history. As mentioned your credit history may include any missed payments or defaults. It also includes the number of any recent applications you've made and public information such as Electoral Roll and bankruptcy information. It’s also based on the amount of credit you currently have and how well you are managing it.
Each lender has a different set of requirements when assessing potential customers for a credit product. There isn’t a specific credit score lenders use to make approval decisions. This means you may be eligible for one credit card but not the other. Lenders will also check the information held on your credit file at one or all of the three main credit reference agencies – Equifax, Experian, and TransUnion.
This table gives you an idea of what these agencies consider to be ‘good’ and ‘bad’ credit scores:
Correct as of June 2019
Reasons you could have bad credit
There are a number of reasons why you could have bad credit, for example:
- Breaking your credit agreement – If you missed any payments or went over your credit limit, this will break the terms of your credit agreement and be noted on your credit file.
- Getting into financial difficulty – Each repayment you miss is noted on your credit file. Missing multiple repayments can cause your score to quickly drop, particularly if you miss a number of consecutive repayments.
- Being close to your credit limit – The amount of credit you use also impacts your score. Always use your card sensibly and make your payments on time.
- Having no credit history – If you’ve never taken on any form of credit before, lenders and credit reference agencies have no way of knowing how you handle credit. This means you’ll likely have a low credit score.
- Having too many credit searches – if you apply for credit many times this leaves a lot of hard searches on your credit file. Too many of these searches in a short space of time can lower your credit score.
- Public Information – If you have recently had any County Court Judgements (CCJs) or have filed for Bankruptcy in the last 6 years this will adversely impact your ability to get credit.
If any of the above applies to you, bad credit credit cards could be an option to help improve your credit rating.
Why you should get a bad credit credit card
Even if you find you have a poor credit file, you still have options when looking for a credit card. Some providers offer specific credit card products for bad credit. These cards work in the same way as a standard credit card, but these are some changes. You may find that your credit limit is lower, and these cards come with a higher rate of interest.
Using these cards and making your payments on time, will show that you are able to manage a credit agreement. Your credit score should then improve over time.
Here are some of the key points to consider when getting a bad credit credit card and some things to be aware of:
- You can use a card to build your credit score.
- Your purchase made with the credit card are protected, just like a standard credit card.
- One of these cards may not be suitable if you have CCJs or have been declared bankrupt.
- You may also struggle to get a card if you have no credit history at all.
- You are unemployed or not on the electoral roll at your current address.
Getting a credit card with bad credit
You can apply for a credit card if you have bad credit, but you should make sure it’s the right card for your circumstances.
There are many different types of credit cards available, each with different uses. These can include 0% balance transfer cards, interest-free purchase cards, and even cards with cashback. However, these cards are usually only available to people with good or excellent credit scores. If you want to be considered for these cards in the future, you should look at improving your credit score. This is where a credit card for people with a bad credit score could help.
Eligibility checking for a credit card
Guaranteed acceptance credit cards are sometimes offered to borrowers with an excellent credit score. If you have a poor credit score, you might find the application process less straightforward.
- Many lenders give you the option of an initial eligibility check. This helps you work out if you will be accepted without a credit search being left on your credit file.
- An eligibility check gives you an idea of whether you’ll be accepted for credit but it’s not guaranteed.
- Additional fraud, identity and affordability checks need to be carried out. This means the cross-checking information in your application against your credit report.
- If you decide to carry on with the full application, firms will perform a full credit check that will be noted on your credit file.
Applying for a bad credit credit card
- First things first, if you can, check your credit score. This will show your current situation and highlight any problems with your credit report or mistakes you need to fix.
>Find out more about your credit score
- When it's time for you to choose a credit card, see if you can do a soft-search eligibility check before making an application in full. This will tell you if you are likely to be accepted but without affecting your credit score.
- All lenders have their own specific process, but we've shown below how you can apply for a bad credit credit card at Vanquis:
View our credit card range
We currently offer three cards:
- Vanquis Chrome Card - 29.5% APR (variable)
- Vanquis Classic Card - 39.9% APR (variable)
- Vanquis Origin Card - 59.9% APR (variable)
Read our credit cards page to find out more about our card range.
Next you can check your eligibility with our quick and simple online application.
There are just 4 steps to complete, and we'll be able to provide you with an instant decision. This won't affect your credit score.
Complete an application
If you're happy, complete and submit your application.
You can download your Vanquis Bank App which will help you to easily manage your credit card. Then just wait for you card in the post.
Can I get a credit card with bad credit?
Yes. You can apply for a credit card with bad credit, but you should make sure it’s the right card for your circumstances.
Although there are many different types of credit cards available, each with different uses. There are cards with 0% balance transfers, to interest-free purchases, and even cashback. These cards are usually only available to people with good or excellent scores. If you want to access these types of cards in the future, you should look at improving your credit score. This is where a credit card for people with poor credit could help.
Can I apply for a credit card if I have no credit history
If you have no credit history, this means you’re essentially ‘invisible’ to lenders and credit referencing agencies. This means they have no way of knowing how you manage your money of how your handle credit. If you want to take out a credit card, you may need to apply for a credit card for bad credit – this can then be used to help build up your credit score. If you have no credit history, using credit correctly might see your score improve more quickly than if you have a bad credit history.
Will my eligibility be guaranteed with a credit card check?
While it’s unlikely you’ll find any bad credit credit cards with guaranteed approval, many lenders give you the option of an initial eligibility check. This helps you work out your chances of acceptance without any trace of a credit search being left on your credit file.
To build your credit rating and be considered for credit limit increases, use your card sensibly, stay within your credit limit and pay your monthly minimum payment on time. Not doing so could harm your credit rating and make obtaining credit more difficult.