Improve your chances of getting credit

Here are some tips to help you get that good credit card deal, despite a less than perfect credit record.

If you're paying 12% or more on any of your debts then you're paying too much. That's my rule-of-thumb for the current climate, based on inflation, availability of credit, current prices, and the increased risk and difficulty of repaying at higher interest rates.

If it's at all possible, you want to get deals that are a lot cheaper than 12% and you want to try and get the real bargains.

But this can be easier said than done. After all, the best deals are usually reserved for people with excellent credit records only. So here are three ways to improve your chances of getting a top credit card deal:

1. Buy PPI with the credit card!

Now you might not expect to see these words on a responsible money site, so allow me to quickly explain. Lenders make a huge profit from payment protection insurance (PPI), which they massively over-price so that they can afford to showcase longer, better interest rates on the debt. Effectively, they're hiding the cost of your loan in an obscure and often ineffective insurance.

It's clear from lots of feedback from applicants over the years that many of the lenders are more likely to accept your application if you take the insurance with the card. This is because you're effectively agreeing a much higher interest rate without realising it. The lender measures the total expected profit versus your credit profile and is now more likely to make a decent profit, so it's more likely to accept you.

However, you don't want to keep this expensive insurance. The good news is that you have 14 days to cancel it without charge! Therefore, after the lender accepts your application for the credit card, you immediately cancel your insurance without it costing you an extra penny. I used this technique myself before whilst stoozing. (Stoozing is borrowing very cheaply on a credit card and then saving that money in a high interest account to make a profit. Due to credit card fees this is rarely worth it anymore.)

It is vital that you cancel the PPI in time, so make a big note to yourself.

2. Appeal the decision

Let's assume you're rejected. Feedback from readers over the years has shown that if you write back and ask why, stating a case as to why each failure on your report doesn't reflect the quality of your application (and if possible including evidence that you're a good customer), the rejection is frequently overturned. Use a professional and unemotional tone by stating the facts only. Considering how often this works, it's worth a try.

3. Talk to your bank

That's another sub-heading you don't often see on a respectable personal finance website. Getting products from your own bank is usually expensive. Banks know that its own customers are a captive market, so they don't often compete on price and can even be very expensive.

However, if you already have a history with your bank - or even an existing credit card company - you can tell it that you're planning to shop around for another credit card but were wondering first if it had any special deals.

Often your existing card provider will give you a deal so as not to lose your business, whereas your bank will give you a deal because it has more information about you from its own records. It knows that you're a good customer, despite the couple of bad marks on your credit report, for example.

This tactic has also been reported to be successful on many occasions over the years.

Some more tips

Finally, here are two bonus tips for if those three ideas fail:

If you're simply unable to get these top deals, or consider your record too weak to do so, try tactical applications. This means going for deals that aren't top but are still good, so that you're less likely to be rejected and further damage your credit record.

You can see how your credit record looks now by viewing your credit report online with a free, 30-day trial of CreditExpert, after which you'll be billed £7 per month if you choose not to discontinue the service.

If you can't even get reasonable deals, it's better to get debt advice than to jump into a more expensive debt. National Debtline continues to get excellent feedback and you can also learn new tactics yourself by checking out our new Dealing With Debt blog.

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