Advantages of Poor Credit Cards
• High Approval Rates – as these cards are specifically aimed at people with low credit scores, their approval criteria are fairly lax. Even if you’ve made a few late payments in the past, you’re still likely to get accepted so long as it’s nothing too serious and your other circumstances look okay.
Depending on the card, you may even be able to get away with some serious black marks on your records such as CCJs or defaults, although these will generally have to have been satisfied if your application is to be successful.
• Build Up Some Positive History – like all credit-based products, the way you use them will be recorded on your file. This is how your rating became tarnished in the first place of course, but it works both ways. If you use your card responsibly, stay within your limits, and make your repayments on time, these facts will also be recorded on your file.
Over time, this ‘good’ history will start to outweigh the bad, and the process will only accelerate as the older black marks begin to drop off under the six year rule.
The Disadvantages of Poor Credit Cards
• They’re Expensive – credit card issuers are obviously taking something of a risk when they lend money to people with adverse history on their files.
They need to compensate for this by charging higher interest rates so that the people who do pay their bills make up for those that don’t. There’s also the fact that there’s little competitive pressure to push down rates such as you’d find on more mainstream cards.
• Few Features – You’re not going to be finding any balance transfer offers or reward points programs on these cards. In fact, you’ll find little other than the chance to take out finance at high rates.
• Low Borrowing Limits – a typical card of this type will have a very low limit of maybe a couple of hundreds of pounds. This might actually be a good thing at first so you don’t go mad spending you new ‘riches’. In any case, as you continue to use the card within the terms of your credit agreement, you’ll generally find your limit is pushed up gradually.