Around 20% of the UK population will face problems when applying for a Credit Card. This does not automatically mean that you have a bad credit history it may also be caused by fact that you have no credit history.

What constitutes Bad Credit?

Lenders have always looked at two areas when assessing credit worthiness. They consider credit history and credit score. These two factors are made up of the individuals profile being age, sex, employment status, salary range etc and what public records are available on the individuals’ previous credit behaviour. All this information is collated and a score given. If the score is high enough a credit card will be offered. Each individual lender will have their own score card mechanism and the level of score required to get a card will again vary across all providers. Someone who fails the credit scoring process with one lender will not necessarily mean they will fail with another.  

Causes of Bad Credit Score

Bankruptcy – This is the most serious and stays on the public record for 6 years and will in most cases lead to a failure of credit score and thus an inability to get credit. County Court Judgments (CCJ’s) are also as serious and again will be on record for six years.

Arrears - Less serious but still cause issues with credit score are arrears in personal loans, credit card, or mortgage. Mortgage arrears are considered most serious. One or two late payments will have an effect but not material and lenders usually only contact credit reference agencies once arrears have been ongoing for some time. Therefore being a few days late should not cause an issue but regularly being late may lead to a black mark on your record.

Multiple Applications for Credit – Every time a person makes an application for credit a footprint is left by the credit provider. Whether the application is successful or not the footprint will be left. This on its own is not an issue but too many footprints can lead to a reduction in your credit score.

Higher Interest Rates with a poor credit history

Someone with a poor credit history will not be able to get the best deals in the market as the credit score for these deals are set higher pass marks than more expensive less attractive cards. This inevitably means that only cards available will be ones that charge a far higher rate of interest and charges than the normal mainstream cards. Rates as high as 40% APR in some cases.

Available Credit Cards for Bad Credit