An option to improve your credit: through Credit Card with Poor Credit.
A know fact in credit card business is that almost twenty percent of all applications submitted for credit card face poor credit related problems. Anyone with a poor credit finds his options severally restricted. While evaluating a person’s application for credit card, service providers look at two factors: First, the applicant’s credit history and second his credit score. A poor credit leaves a negative impact on assessor.
However, if you are facing problem due to your poor credit, don’t worry, since there are companies who have devised their schemes where in they offer credit card even to people with poor credit, bad credit rating or people with no previous credit history.
A good news for people with poor credit is that there are increasing number of companies in UK who offer a not so stringent (rather flexible) assessment process which helps them to consider all applications fairly, irrespective of the credit history. Infact there are companies who offer credit cards to people with a poor credit and who have been refused a card in past. Such cards are issued sympathetically by companies to help people improving and rebuilding their credit history.
Credit Limit and Various Charges
The normal credit limit of credit cards issued to people
with poor credit varies between £200 and £2,500,
with no annual fee. In this case APR (annual percentage
rate) remains high but is reduced when card holder starts
maintaining a consistent payment history. However, a
major disadvantage of credit card for poor credit is
the money it costs. The best credit card deals are only
open to people who meet the credit scoring requirements
set down by the main lenders. People with a poor score
are charged a little higher interest rate. Another fact
is, even if the card is issued free of cost, there are
few charges which are always associated with credit
card, which are as follows:
Annual Credit Card Fee: This is a one time payment annually which is charged for proving the service. Usually, most companies issuing credit cards waive off the first year’s charge to attract customers in the competitive credit card business. However, card holder has to pay this fixed annual charge, starting from the second year.
Rate of Interest: This is the most important and significant factor in availing credit card of any company. Rate of Interest is applied on revolving basis which means that if 2 % is the interest levied on your card, on the outstanding balance due each month, the actual rate of interest annually is close to 24% per annum. This means if you pay merely the minimum due each month, you’d be paying an annual interest of almost 25% on the total amount you have spent that year. You can see how it can skyrocket.
APR (Annual Percentage Rate): There are two different schemes on credit cards-variable or fixed. Therefore, before taking card, you must clarify and know the APR on your credit card to make sure you know what plan you are on. This can also help you avail lower interest rates on your card.
Credit card with poor credit: An
easy way to improve credit rating
If you have poor credit, you must take it as a warning
sign and should immediately start working on improving
your credit rating. Because, even if you get credit
card or any loan inspite of poor credit, in the long
run you remain in loss due to payment of higher interest
rate. A credit card with poor credit rating provides
you a good chance to improve your credit record. This
can be done, if you ensure you repay each month so there
is no charge, after a year you will have built sufficient
credit history to enable you to move to a card with
a more competitive rate of interest. If used sensibly
a credit card can help you strengthen or rebuild your
credit rating.
If you have a poor credit you are not going to get the best credit card rates compared to the options available to someone with good credit. However, now a poor credit does not stop companies offering credit cards to people with poor credit. Once, a card is issued to you despite a poor credit, you must take is as a chance to improve your credit record, which can be done my maintaining consistent payments.
