Gone are the days when credit was easy to come by. Banks have done a u-turn on the supply of credit since the economic crisis and subsequent recession.
Even if you were always able to get credit easily in the past, you may now find yourself being rejected for no apparent reason.
Unfortunately, it is a vicious circle of rejection and further rejection, for even one rejection weakens your credit score and can lead to more.
Credit scoring can be a mysterious thing and not all lenders adopt the same approach, so it can be difficult to know how to improve it.
If you receive a lot of rejections, then your credit score must be low, or you have a poor credit history. If you have only been rejected once, then you may not just fit those particular lenders’ parameters.
There are a number of things you can do to improve your credit score and get back on track.
One option is to look at applying for bad credit cards. These cards are designed for those with a poor credit rating.
If you are someone with a bad credit rating, you will not be considered for the most competitive deals on the market but a bad credit credit card is ideal if you have poor rating or you have little or no credit history to assess.
One of these cards can go a long way to improving your credit rating and in return giving a better chance at securing a more competitive credit card deal in the future.
Bad credit credit cards are essentially a trial run, a chance for you to demonstrate that you can manage credit and debt responsibly.
After all, a credit card can be a very useful thing to have in certain scenarios, for example it is a good idea to make any purchases over $100 on a credit card as this offers you a certain level of protection should anything go wrong.
If the goods you buy are faulty, or the company you purchase from goes bankrupt, your payment is protected, unlike if you had paid cash, or by debit.
They are also very useful for purchasing products on the internet, an increasingly popular way to shop.
These cards do, of course, come with certain drawbacks, as part of their remit is to encourage responsible lending. So naturally the annual percentage rates (APRs) are much higher than on other credit cards on the market.
You will not be able to access any interest free deals on these cards either. By operating strictly within the rules of these cards, that is paying them off every month in full so you do not incur interest, you can work towards improving your credit rating.
It is also a good way to build up a good credit history from scratch. Another point to remember is that payment protection insurance is costly and if you feel you might need it, then check out some stand alone providers first as they often offer better value.
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Great reminder. I know of so many kids that turn 18 and try to get a card, only to be rejected. It just ends up hurting their credit in the long run.
The credit system is pretty interesting. I think the way that the scores are tallyed is a little archaic but it doesn’t seem like it will be changed anytime soon. I’d rather live on cash anyway.