What To Do If You Are Turned Down for a Credit Card for Bad Credit

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    Oct 23, 2013
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MasterCard credit card
MasterCard credit card
Photo by Håkan Dahlström

If you’ve been turned down for a loan or a credit card, a common reason for that is that you have adverse entries on your credit record. But don’t jump to the conclusion that you have been ‘blacklisted’. Instead, find out a bit more about the reasons for the rejection, which can happen to almost anyone, and then decide what, if anything, you want to do about it.

The ‘Blacklist’ myth

There is no such thing as a blacklist consisting of the names of people who have been banned from the credit market. Each credit provider has its own set of criteria for agreeing to lend to individuals, and they are different for each product.

The idea of the blacklist is a myth that has been cultivated by some lenders and debt collection agencies to frighten their customers into paying up, come what may. Obviously, if you have a lot of bad debts and you have repeatedly failed to make contractual payments, then you will find it hard to find someone who is prepared to lend to you. That’s common sense. But there isn’t a master list of bad debtors who nobody will lend to.

The Credit Reference Agencies

It’s true that information is kept by the credit reference agencies and that when you apply for a credit card, the card provider will check with one or more of them to see whether your record of using credit matches their criteria for lending. So find out what information about you they can access, by looking at your record.

Apply to see your record

You need to write to each of the credit reference agencies to check your record. Inconveniently, you probably won’t know which one your credit company uses, so it’s best to contact all of them. You should clearly state your full name, date of birth and all your addresses for the last seven years, and enclose payment of £2.00 with each letter.

The agencies are obliged to send you a copy of the information they hold on you, which you can then scrutinise to find out why you’ve been refused for a card account.

The persistent defaulter

It could be that you have a record of defaults and county court judgments listed against you. If that’s the case, it’s likely that you should be taking steps to reduce expenditure and you should avoid increasing your debt burden, ideally with the help of advice from the CAB. That doesn’t mean that you cannot access to any card at all.

Barclays, Vanquis and Capital One, to name a few, all have credit cards for people with less than perfect credit records. But a credit card for bad credit has to be handled with care because it will bear a high interest rate.

You could also apply for the Cashplus Creditbuilder card. That’s a pre-paid card for which acceptance is guaranteed. You have to pay a monthly fee of £5.00 consistently for a year. Use the card for regular spending, and at the end of the year, your record of responsible use will be reported to the credit reference agencies, helping rebuild your record.

The one-off problem

Another possibility is that there is a single problem, maybe a disputed debt dating from several years ago, which is being picked up on.

If the card you have applied for is one with strict criteria, then an isolated issue like that can be enough to prevent your application being successful.

If that’s the case, then it should be relatively easy to remedy the problem. If you dispute the debt listed, you can try to persuade the creditor in question to ask the agency to remove the listing. They shouldn’t have listed it in the first place if there was a genuine dispute.

If they won’t remove it, you can mount a complaint, and also insist that the agency includes in their record a notice explaining that the debt is disputed. The agency is obliged to publish a notice worded by you, explaining the situation.

If the debt is small, and a tiny one is sometimes the culprit, then you may want to swallow your pride and pay it off, disputed or not, to clean up your record.

The credit novice

Maybe you have not been in the habit of using credit at all. That can raise suspicions, and you may have to build up a record to show that you can use a credit card responsibly before you are generally regarded as a good risk.

There are a number of good cards to use to build up a record from scratch, and a good starting point is the Money Saving Expert’s website. A credit card for bad credit will charge high interest rates, at least to start with, so it must be paid off in full every month without fail.

There is a way ahead for everyone if they are turned down for a credit card, so there is no need to panic about the mythical Blacklist.

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Creditn industry expert Sam Jones recommends that people looking for a credit card for bd credit visit http://www.uswitch.com/credit-cards/bad-credit-credit-cards and read the advice and guidance

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