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If you are stuck with a bad credit history and are finding the restrictions of not having a credit card a problem then a bad credit credit card could be the answer.
It is possible to have a bad credit rating for a number of reasons: missed payments on previous credit cards and loans, arrears in rent or mortgage payments, delayed payment on bills be it house hold or council tax, county court Judgements (CCJ’s) and bankruptcy. But some individuals find themselves with poor credit history simply from not ever using credit to purchasing products, being a student, on low income or new to the UK. If you are unsure of the reasons you are being denied a credit card, it may be advisable to apply for a copy of your credit report.
Obviously the best way to improve a bad credit history due to missed payments and debt is to make sure any bills or financial arrangements are stuck to. Unfortunately it can still take time to rebuild your credit rating and in the mean time you may feel your restricted purchasing power is a problem. This is where a bad credit credit card can help.
Bad credit credit cards not only give you more purchasing power, they can improve credit history for both individuals with no credit history and those with poor credit history (check policy wording). Each time a monthly re payment is made to your bad credit credit card on time, your ‘behavioural score’ increases. Over time your credit history may have improved enough so that your own bad credit credit card company reduce the interest rate on your credit card. Plus applications to other companies for credit become more successful.
Use your bad credit credit card wisely
Remember to use the bad credit credit card wisely. Most companies that offer bad credit credit card charge a higher standard rate of interest. This should not be a problem if your purchases are paid in full each month, but like any credit card, bad credit credit cards can still cause your debts to mount if you are only paying off the minimum payments. Plus any late payments can still jeopardize your credit history, cause interest rates to increase and credit limits to be cut.
If you are worried you may run into debt or you are having trouble being accepted for a bad credit credit card, the other option is a Prepaid credit card. Prepaid credit cards allow the holder to place money into their account, thus topping it up (just like a phone card) ready to use as a Credit Card. The benefits being: you can use it to make purchases as you would on a bad credit credit card, for example via the internet, retail shops, ATM’s and whilst overseas but you are unable to spend over the amount you have all ready placed on the card.
When applying to a company for both bad credit credit cards and prepaid credit cards read all the information available before applying, as there can be many hidden costs. Make sure they belong to the relevant credit institutes and only apply if you genuinely feel it is the right decision for you, as applying for numerous forms of credit in one year can also affect your credit rating.