How to get a credit card with an imperfect credit history

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by: MarkeD
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Date: Tue, 23 Mar 2010 Time: 3:37 AM
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As anyone applying for a credit card will testify, it is more important than ever to have a good credit score in the current tough economic climate. While this may make for worrying reading if you're currently suffering from a bad credit rating, it's not all bad news, as there are some simple steps you can take to get it back in shape.

First off, you need to get your hands on your credit record from one of the three main agencies, equifax, experian or callcredit. The reason for this is that lenders make checks with credit reference agencies to see whether an applicant has kept up-to-date on repaying their credit, and use a "credit scoring" system to decide whether or not to lend. In short, the better the score, the better the rate you will get.

You do usually have to pay a small fee of £2 upwards and can even opt for a more comprehensive report. But you can also save yourself a little bit of money by using a free credit checking service, offered in conjunction with Equifax.

Set the record straight

If you find any errors, contact the credit agency straight away asking for them to be corrected, and if your circumstances have changed, you may be able to add a "notice of correction" explaining your financial situation - although you will have to provide proof to substantiate this.

This may be the case if, for example, you bought a house and had a mortgage with a partner but have now sold it and are no longer involved with them; if you are still financially linked with that person when you shouldn't be, tell your lender and agency right away.

Improve your rating

Make sure you're registered on the electoral roll at your current address, and if you've fully paid a County Court Judgment - or if your bankruptcy has ended - check this is shown on your report. The key to keeping your credit record clean is by making payments on time - and by making more than the minimum payment on credit agreements each month to build a positive payment history.

You can also streamline your borrowing and close cards and accounts you no longer use, as lenders look at available credit - even if you are not using it. And don't use a scatter-gun approach when applying for cards or loans, as multiple applications to several lenders within a short period will show up on your credit profile, and may lead to some lenders refusing you credit.

If you do want to see which credit cards you are likely to be accepted for without making the actual application, then check out this tool which allows you to make multiple credit card applications without leaving a blemish on your credit profile.

Consider a credit-building card

If you have some serious credit blemishes on your record, you may still be able to get a credit card, but are likely to be restricted to the specialist providers who concentrate on the "credit-building" market - such as Vanquis and Aqua.

"Typically, customers with one of these cards tend to start off with relatively low credit limits, higher monthly repayment requirements and a much higher interest rate," according to David Black from financial analyst Defaqto. "But if you service it properly, by making repayments on time and staying within your limit, you may be able to get your credit limit increased - or you may become eligible for a more competitively-priced mainstream card."

Another category of "credit-building" cards are those for people without any financial track record, such as youngsters, recent immigrants and those without bank accounts.

"Cards that fall into this group include Barclaycard Initial and Capital One Classic," added Black. "Using these cards helps individuals build up a credit history.

About the Author

How to get a credit card with an imperfect credit history was produced by confused.com, the credit cards comparison website.