Choosing a credit card can be very time consuming, especially if you have fewer options available to you due to a bad credit score. However, there are still options available to you, and you can also use a credit card for bad credit to improve your credit score, which is important if you want to apply for other financial products later.
What is a bad credit score?
A credit score is a number that depicts a consumer’s credit worthiness, and the higher the score, the better the borrower looks to potential lenders. A credit score is based on a number of factors regarding a person’s credit history, which includes the number of open accounts, their total debt and their repayment history.
Lenders use credit scores to determine if an individual is likely to repay loans on time, so if you have a bad credit score you are less likely to be approved for credit. If you have a low credit score, it could be because you have previously missed a payment on credit products, or you have made the payment late. You may even have a low credit score if you have no credit history, as lenders have no way of knowing how you handle credit.
If you have a low credit score – or no credit history at all – you may think that you won’t be eligible for a credit card, however this isn’t the case. The Score Mastercard is the safest way to build credit, and with their high approval rate, you can take back control of your financial future.
What type of credit card can you get with bad credit?
A secured credit card is the best bet for those people who have bad credit scores. Even if you don’t have a bad credit history, secured cards are a great financial tool as they help you to build credit and take back the reins on your financial future.
The difference between a secured credit card and a regular credit card is that a normal credit card doesn’t require a cash deposit, which is why it is considered “unsecured”, and a secured credit card has been “secured” by the borrower with a deposit.
The deposit amount can vary however it is usually equal to the credit limit on the secured card. Both types of cards work the same way and you can use both to make transactions in retail stores and online.
Secured cards are the easiest type of card to be approved for as there is little risk to the credit card issuer due to the security deposit, which they will keep if you default on payments.
If your account balance is zero you will be eligible for a full deposit refund, and your security deposit is returned to you once you close your account. If you have an outstanding balance, the credit card company may use your security deposit to pay off the existing balance and any outstanding fees before refunding you the remaining amount.
How does a secured credit card help to build credit?
Rebuilding your credit score may feel slightly overwhelming, however it is entirely possible and a secured card can pave the way for you to rebuild your credit. It will help to build credit in the same way that a regular credit card does, as long as it reports account activity to credit reference agencies.
As long as you make the very least of your minimum card payments and do not consistently max out your credit card your credit score can continue to rise.
You can use the Score Mastercard to make everyday purchases that you can afford, and by managing your spending and repaying the minimum payment required every month, your repayment history is reflected to all the major UK credit bureaus.
What is the Score MasterCard?
If you haven’t already heard of the Score MasterCard, it is known as the only card available to everyone, regardless of your credit score.
If you are building from the ground up with your credit score, or if you are rebuilding a bad credit score, the Score MasterCard will help you to take back control of your finances.
The Score Mastercard has an affordable APR of 29.99%, no annual fees and a low monthly subscription cost of £19.99.
The Score MasterCard is perfect for you if you have ever been declined for a credit application, if you have been declared bankrupt previously, or if you are looking to build your credit history for the first time.
One of the biggest benefits of the Score MasterCard is that it gives you 1% cashback on purchases, which means you actually get money back every time you spend with your card.
How can you apply for a secured credit card?
If you find that the Score MasterCard is the right secured card for you, the first step is to register and complete your application.
The second step is to pay the refundable security deposit for the card. The amount of your deposit then becomes your spending limit. The credit card company holds your deposit as collateral. Once you have paid your security deposit and it has been received, you will receive your card in approximately 5 working days.
Once you receive your card through the post, you can then use it to make regular payments for spends such as petrol or your weekly grocery shop. You can spend up to your credit limit, however I would advise you to pay it all off by the due date each month. This is because if you use too much of your available credit it can work against your credit score. You should always pay at least the minimum amount that is due by the due date, as paying this off in time is the number one factor that will impact your credit score.
Finally, once your credit score has increased to the stage where you can qualify for an unsecured card, you have two options.You can either keep your secured card to have two different sources of credit on your credit report, or close your account and get your deposit back. In order to close your account, you will have to bring your account balance to zero first. If you are interested in reading more about the Score Mastercard, you can follow this link to their website to hear more and apply for a card.