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Credit Cards to Help Build Credit |
Credit Cards to Help Build Credit
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Rebuilding Credit Information |
The Importance of Establishing a Good Credit History
Even with poor credit, you will be able to finance many purchases such
as a home or vehicle. However, good credit has certain advantages.
Those with a high credit score receive prime rates on home loans and auto
loans. For some, low rates may not be a huge deal. Yet, low interest rates on
loans can potentially save you hundreds each month. Moreover, having
good credit unlocks the door to better financing alternatives.
Similarities Between Having No Credit and Bad Credit
Unfair as it may be, some lenders group those with no credit and
individuals with poor credit into the same category. This makes it harder for
young people and those trying to establish credit. Individuals with
poor credit made certain mistakes that justify a lender's reluctance. On
the other hand, those with no credit history have zero credit mistakes.
So, why do some lenders deny credit to those with no credit history?
In a nutshell, before granting a credit card or loan, lenders will
review credit reports to examine past relationships with other creditors.
It's a way to determine an applicant's likelihood of repaying funds. If
you have no credit history, lenders become uncertain. Instead of taking
a gamble, they rather deny an application.
Getting Approved for a Bad Credit Credit Card
Getting approved for a bad credit credit card is easy. The tricky part
is finding a lender that specializes in this sort of credit. Use the
internet to your advantage. Many bad credit credit card lenders offer
online applications and instant approvals. If you are hoping to build a
good credit history, this is one of the easiest approaches.
There are two types of bad credit credit cards. If you are approved for
an unsecured card, you may receive an initial low credit limit.
However, as you maintain regular payments, the creditor may gradually increase
the spending limit. With a secured credit card, applicants must open a
saving account with the lender. In the event that you decide to stop
making payments, this account serves as collateral.
Credit Scores and Rebuilding your Credit History
A credit score reflects credit payment patterns over time, with more emphasis on recent information. Ways to improve a credit score generally include the following:
. Pay your bills on time. Delinquent payments and collections can have a major negative impact on a credit score.
. Keep balances low on credit cards and other "revolving credit." High outstanding debt can affect a credit score.
. Apply for and open new credit accounts only as needed. Don't open accounts just to have a better credit mix. It probably won't improve your credit score.
. Pay off debt rather than moving it around. Also, don't close unused cards as a short-term strategy to improve your credit score. Owing the same amount but having fewer open accounts may lower your credit score.
Review your Experian credit score regularly so you know what is being reported. It won't affect your credit score to request and check your own.
Get immediate online access to your Experian credit report and credit score. Order now!
Items that Improve Credit Scores
Paying your bills on time is the single most important contributor to a good credit score. Even if the debt you owe is a small amount, it is crucial that you make payments on time. In addition, you should minimize outstanding debt, avoid overextending yourself and refrain from applying for credit needlessly.
Applications for credit show up as inquiries on your credit report, indicating to lenders that you may be taking on new debt. It may be to your advantage to use the credit you already have to prove your ongoing ability to manage credit responsibly.
If you do have negative information on your credit report, such as late payments, a public record item (e.g., bankruptcy) or too many inquiries, you may want to pay your bills and wait. Time is your ally in improving your credit scores. There is no quick fix for bad credit scores.
One common question that many consumers have regarding their credit score involves understanding how very specific actions will affect it. For example, someone might ask if closing two of his or her revolving accounts would improve his or her credit score. While this question may appear to be easy to answer, there are many factors to consider. Credit scores are based entirely on the information found on an individual's credit scores. Any change to the credit report could affect the individual's credit score. Simply closing two accounts not only lowers the number of open revolving accounts (which generally will improve credit scores), but it also decreases the total amount of available credit. That results in a higher utilization rate, also called the balance-to-limit ratio (which generally lowers scores).
As you can see, one seemingly simple change actually affects many items on the credit report. Therefore, it is impossible to provide a completely accurate assessment of how one specific action will affect a person's credit score. This is why the credit risk factors provided with your score are important. They identify what elements from your credit history are having the greatest impact so that you can take appropriate action.
How Long Does It Take to Rebuild a Credit Score?
Actually, you don't rebuild the credit score. You rebuild your credit history, which then is reflected by your credit score. The length of time to rebuild your credit history after a negative change depends on the reasons behind the change. Most negative changes in credit scores are due to the addition of a negative element to your credit report, such as a delinquency or collection account. These new elements will continue to affect your credit scores until they reach a certain age. Delinquencies remain on your credit report for seven years. Most public record items remain on your credit report for seven years, although some bankruptcies may remain for 10 years and unpaid tax liens remain for 15 years. Inquiries remain on your report for two years.
For the millions of consumers in the UK with bad credit and no credit, getting approved for a major credit card takes a tremendous amount of effort and time. Unfortunately, establishing credit is as equally challenging as re-establishing or rebuilding credit. Creditors and credit card companies consider both types of people as risky applicants, and in these challenging times, credit card companies are now more than ever checking the applicants credit worthiness. Thus, they are less eager to extend a line of credit. However, there are ways to get around these problems. Credit cards designed to build and re-build credit are intended to make it easier for some to obtain credit. Barclaycard and Vanquis both have credit cards designed to help.
  
Barclaycard Initial Credit Card
Do you need to strengthen your credit rating?
Choose Barclaycard Initial and we’ll guide you through the whole process. It’s a great card with lots of useful benefits such as fraud protection.
- Strengthen your credit rating
- Enjoy a credit limit of up to £2,000 (minimum £250)
- 27.9% APR typical (variable)
- Go Contactless - Make purchases of £10 and under in an instant wherever you see the Contactless symbol
To qualify for a Barclaycard Initial Credit Card:
- You looking to strengthen your credit rating or want to rebuild your credit history
- Are you 18 or over
- Do you have a permanent UK address for 3 months or more
- Do you have a regular income of more than £3,000 pa
- You must not already have a Barclaycard
- You Haven't missed multiple payments on a credit agreement within the last 12 months
- You don't have a CCJ (County Court Judgment) or IVA (Individual Voluntary Arrangement) and haven't been registered bankrupt
- Aren't a student (are you a student?)
Apply for the Barclaycard Initial Credit Card
Refused credit? The Credit Card Centre could be the solution to help you get credit
Many people find us after they have been refused credit by other companies. Perhaps you need credit, but because you have a poor credit history or no credit history, or are on a low income, credit cards might seem out of your reach.
You might have heard the term 'sub prime credit' - industry-speak for someone with no credit history or poor credit history; who finds it difficult to obtain credit from mainstream lenders. We see things differently and treat each case on its own merit
How to Improve Your Credit Rating
Before you set out to improve your credit rating, it's important to find out why it is low. If you don't know, ask to see your credit reference file to find out. (See what can you do about a bad credit score to find out how to do this.) Assuming you know why you have a poor credit score, there are a number of simple steps you can take to help improve your credit rating and build credit history:
- Make sure you are on the electoral roll. It only takes a few minutes to register with your local council and it will help to improve your credit score over time
- Pay bills on time. This will begin to improve your credit history and will again give you an improved credit rating over time
- Be careful about the number of times you apply for credit. Every application is logged on your file and too many applications may not help your credit rating
- When applying for credit never give false details, always tell the truth. If there are inconsistencies with past credit applications or details that are held on checking systems differ from your application it will effect your credit score
- Start to build a credit history over time and when you check your credit reference file you should find an improved credit score
- How can you improve credit ratings if you can't get credit?
- Specialist credit cards like our Vanquis Visa Card are specially designed for people with bad credit. Even if you have been turned down by other companies, you may be accepted by us. As long as you manage the card properly, stay within your credit limits and pay promptly, this is a good way to build credit history and to improve your credit rating.
Managing Your Finances to Repair Adverse Credit Score
It’s easy to find yourself with adverse credit, but what can you do about it? Applying for an adverse credit card is one way to build your credit rating (see how to improve your credit rating page) but you should also be thinking about addressing how you got into this situation in the first place.
Tips on how to manage your finances more effectively
For some people, adverse credit starts as a result of a one-off event, like divorce or a health problem which puts strain on personal finances, but for many others, adverse credit is a result of mis-managing personal finances.
Adverse credit is not as uncommon as you may think. The Citizen’s Advice Bureaus deal with over 5,000 people with debt problems everyday; average household debt (excluding mortgages) in the UK is over £8,000 and rising*. Rather than ignoring your situation and living with impaired credit and the complications it can bring, why not take a few simple steps to manage your finances better:
Set yourself sensible financial goals. Where do you want to be in 1 month, 3 months, 1 year and 3 years?
Write down your outgoings - the money you need to get by each month. Include all the essentials like mortgage/rent, council tax and utility bills, food shopping, travel to work.
Look at the money you have coming in; if it’s more than your outgoings, take the remainder and give yourself a budget to include on clothes, going out, paying off credit debts or building savings etc.
If the money coming in is less than your outgoings, think about what you can do to reduce your outgoings
- Why not search online price comparison sites for items you’re looking to buy, in order to get the cheapest price
- Search out the cheapest gas/electricity/water providers as you could make substantial savings throughout the year
- How about turning your heating down a degree or two to reduce your heating bill and at the same time help the environment
- Are there any non essential items that you can cut back on i.e. do you really need that extra pair of shoes?!
Or try increasing the money you have coming in;
- Maybe a new job
- Gain some overtime at work
- Can you turn an interest or hobby into an income earner
- Could you have a car boot sale and raise money from old knick-knack’s that you no longer need or use
If it all seems too difficult - get advice. Your nearest Citizens Advice Bureau will be happy to talk through your financial situation and advise you what you can do about your debts.
What not to do
Whatever you do, don’t ignore demands for money, credit debts, council tax bills or the like. This is the fastest way to end up in an adverse credit situation, which is often avoidable. If you are having trouble paying debts, always talk to the company or entity involved or get independent advice. |
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Barclaycard Initial Details:
- Strengthen your credit with the Barclaycard Initial Card.
- Credit limit up to £2,000. The minimum credit limit is £250.
- Go Contactless - Make purchases of £10 and under in an instant wherever you see the wave symbol.
- Typical rate 27.9% APR(variable).
- No Annual Fee.
Barclaycard Initial Approval Criteria:
- Have a credit rating that needs improvement
- You have no history of bankruptcy
- You have not had any County Court Judgments (CCJs) or Individual Voluntary Arrangements (IVAs) registered against you in the past 5 years
- You have not missed multiple payments on a credit agreement within the last 12 months
- You have been unsuccessful in attempts to obtain a credit card in the past (12 months) OR
- You have no credit history, for example;
- You have never used credit in the past
- You are new to the country.
- Don't already have a Barclaycard
- Have had a permanent UK address for 3 months or more
- Have a regular income of more than £10,000 pa
- Are aged 18 or over
Capital One Classic Card Details:
- Get back on track by improving your credit rating.
- Up to £2,500 in spending power
- Typical 34.9% APR variable
- Credit limit increase - Manage your account well † and we'll increase your credit limit on your 4th statement.
- Free Identity Theft Service
- Register Online for Free Identity Alerts powered by Equifax
- No annual fee.
Capital One Classic Card Approval Criteria:
- I have had little credit in the past, for example: I have an overdraft but no credit cards
- I have had credit problems in the past, OR
- I have no credit history, for example:
- I have never used credit in the past
- I am a student
- I am new to the country
- Any Income Considered
- At least 18 years of age
Vanquis Visa Card Details:
- No annual fee
- A credit limit assigned at a fixed amount to help you stay in control
- Up to 56 days interest free on purchases
- Free additional cardholder
- Free fraud monitoring - we'll warn you of any suspicious activity on your account
- Chip & PIN technology for added security whenever you use your card
- typical 39.9% APR variable based on a typical credit limit of £250
Vanquis Visa Card Approval Criteria:
- You must have not applied within the past 6 months
- You are 18 years of age or over
- You are a permanently resident in the UK
- You do have a landline phone number
- You are registered on the voters roll
- You do not have an outstanding County Court Judgment against their name or one that has cleared within the past year.
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