We take a closer look at the cards that could help you improve your credit score.
In the aftermath of the 'irresponsible lending' debacle, credit card providers have dramatically tightened up on who they accept. These days, you need a nigh-on spotless credit rating to be accepted for the cards offering the best deals on cashback and 0% balance transfers.
There are certain cards, however, that will actually help you get your credit score out of the doldrums and up to scratch. So I'm going to highlight some for you to consider.
Where you stand
The first thing you should do is find out exactly how good (or bad) your credit rating is. Each of the cards mentioned here is suitable for people with particular credit backgrounds - so you need to work out exactly where you stand before you apply.
You can check your credit record for free by signing up to a 30 day trial with Experian. If you don't want to start paying for the service, just make sure you cancel your subscription before the 30 days is up.
A warning
The single most important thing to remember about using these cards is that you should always clear your balance - in full - every month.
Credit-building cards come with enormous interest rates attached (the lowest here is a hefty 27.9%), so you need to make absolutely sure these don't end up applying to you. In fact, if used properly, the interest rates attached to these cards should be irrelevant.
In a nutshell, these cards should not be used for spending more than you can afford to pay back!
What's on offer
Here are five cards that might be able to bump your credit rating up a notch:
|
Credit card |
Typical APR (variable) |
Interest-free period |
|
Capital One Progress |
34.9% initially, but reduces the longer you hold the card. |
56 days |
|
Barclaycard Initial |
27.9% |
56 days |
|
34.9% |
56 days |
|
|
35.9% |
51 days |
|
|
39.9% |
56 days |
To turn good into excellent
Let's look at these in a bit more detail:
The recently-released Capital One Progress card is designed for people with a good but not excellent credit record. If you fall into this category, this is a good card for bumping your rating that bit higher.
The innovative feature of this card is that your APR reduces the longer you use it. The typical APR you'll start off with is a very nasty 34.9%. After five months, it will drop to 29.9%, after 11 months it will drop to 24.9% and after 17 months it will sit at 19.9% - not much higher than the APRs of 'regular' cards.
These rates apply to balance transfers and purchases. And as long as you meet your repayments and stay within your credit limit, the rate falls are guaranteed.
As I said, this isn't the card to choose if you have a really bad rating: You're unlikely to be accepted if you've had any County Court Judgments (CCJs) or defaults in the last 12 months, or if you've never been be given credit in the UK before.
And of course ideally, those falling interest rates shouldn't affect you, because you'll be paying off the balance before the interest-free period ends!
For more chequered histories
The rest of the cards in the table are designed for people with little or no credit history, or those who have missed several payments and incurred multiple card charges in the past.
However, you're still not guaranteed to be accepted for any of these cards. Barclaycard, for example, is likely to reject your application for its Initial card if you've had CCJs or Individual Voluntary Arrangements (IVAs) registered against you in the past five years, or if you don't have a regular income of at least £10,000.
And you'll probably be rejected for all these cards if you've been made bankrupt in the last 12 months. So, before you make any applications, be sure you've read all the terms and conditions on the lender's website. Being rejected for any credit card will put a black mark on your credit record, and could bring down your score even further.
Once you have been accepted for a card, make sure you understand exactly what you need to do to avoid paying those horrendous interest rates. For example, most of the cards give you 56 days before interest is charged; but the Aqua card starts charging that horrific 35.9% interest after just 51 days. Don't get caught out!
Other ways to improve your credit score
So what happens if you're unable to get one of these cards, or if you decide having a credit card just isn't the right choice for you?
Fortunately, there are plenty of other practical steps you can take to improve your credit rating.
First, read these articles: Improve your credit score: The quick dos and don'ts and Protect your credit record. Next, watch this video: The secret reason banks reject you for credit. Then, if you're struggling with your debts, adopt this goal: Destroy your debt
Finally, why not have a wander over to Q&A and ask other lovemoney.com members for hints and tips about what worked best for them?
More: The top 10 warning signs of debt | The secret way banks are damaging your credit rating