Vanquis – Mythbusting the Guaranteed Credit Card #credit #history #report

#guaranteed credit card

Mythbusting the Guaranteed Credit Card

Mythbusting the “Guaranteed Credit Card”

You may have seen several newspaper advertisements or websites that talk about a “guaranteed credit card” or “guaranteed acceptance” credit cards that are supposed to be ideal for people with an adverse or bad credit history. Many of these “guaranteed cards” claim that you don’t need to go through credit checks, employment checks or any other verification in order to get a MasterCard, VISA or AMEX credit card. If you think that sounds too good to be true, you are correct!

Look a little closer at these seemingly attractive offers and you’ll see that what they are talking about are credit cards that require you to make a substantial security deposit or pre-paid cards where you can only spend what you’ve loaded on the card in the first place. They may also decline applications for fraud or anti money laundering reasons, so there really is no such thing as “guaranteed acceptance” or a “guaranteed credit card”.

All applicants for a credit card (or any other form of credit) no matter what the card or who the lender may be, are credit scored. All credit card providers want to know what kind of borrower you’ll be before they make a decision to give you a card or not. So, no one can “guarantee acceptance” for a credit card and if you have a bad credit history, it will be difficult (but not impossible) to get one.

Knowing Your Credit Score

The “no credit check” credit card doesn’t really exist either. Any decision to give you credit, whether it’s a loan, paying by monthly instalments for furniture or electrical goods for example or obtaining a credit card is based on your credit score. You can find out how your credit score is compiled and how to check your own credit rating in “How to Check Credit Score: A Guide”.

Why Do You Need a Guaranteed Credit Card?

  • You may already know or suspect that you’ve got bad credit history.
  • You don’t have enough of a credit history and have never taken out a credit agreement before. Lenders tend to be unwilling to take a risk on someone who does not have a consistent credit record – good or bad.
  • Perhaps you want to protect your credit history from unnecessary checks. Checking your own credit report won’t lower your score, but a history of a lot of checks by lenders on your credit report in a short time looks bad and could affect your credit rating. You can find out more about this by visiting Credit Expert .
  • Maybe you don’t want to run the risk of being turned down or rejected, especially if you’ve applied several times to several providers before.

Don’t despair! Even though the “guaranteed credit card” doesn’t really exist, there are still some options and products available that could suit your needs and circumstances.

Prepaid Credit Card

Prepaid credit cards are probably the closest you’ll get to a “guaranteed” credit card because there’s no need for a credit check and they do not have a line of credit to tempt you to spend beyond your means. In that sense, they are not really “credit cards” at all, but more like a “cash card” that you might use to draw from a bank savings account with a fixed amount of money in it and no overdraft facility.

There’s no risk of getting into debt because a prepaid credit card uses money paid in advance from your bank account. Some prepaid cards can also help you to strengthen your credit rating by giving you a small interest free loan (usually equal to about a year’s worth of monthly fees). As long as you repay the loan each month, you’ll boost your credit rating by showing lenders that you are a responsible borrower. The biggest advantage of prepaid credit cards is the fact that it’s impossible for the card to go over your limit into a negative balance. Prepaid credit cards offer the security, flexibility and convenience of a credit card, especially if you are making purchases on the Internet, without the worries of debt or overspending.

There are also some Pay As You Go credit cards available that share many of the advantages of prepaid credit cards. They are the credit card version of topping up a PAYG mobile phone. You can top up the PAYG credit card at a number of outlets like newsagents, garages or superstores (much like you would top up electricity or gas meter keys) so you don’t even need to have a bank account. PAYG credit cards may involve additional costs, like buying the card itself, monthly charges or transaction and cash withdrawal fees.

“Bad Credit” Credit Card

Since there’s no way you can avoid a credit check, if you know or suspect that you have a bad credit score, it might seem pointless applying for any credit card. However, there are credit cards specifically for people with bad credit scores. You are still not “guaranteed” to get one of these as you would be with pre-paid or PAYG credit cards, but if you’ve struggled to get a credit card in the past, these could be for you.

These cards can also help you to build your credit rating back up over time by demonstrating that you can manage credit successfully and you’ll then be able to apply for more competitive “regular” credit card deals. ↗ Although acceptance can never be 100% guaranteed you do stand a much better chance of success with these “bad credit” credit cards. Even though the likelihood of being accepted for a “bad credit” credit card is reasonably good, it’s still wise to check your credit rating before you apply.

So, if you have a less than perfect credit history, but still want a credit card that offers you a line of credit so you can make large purchases and spread the cost of repayment, these “bad credit” credit cards may be the solution. They do have higher than usual interest charges (Vanquis Visa card has a typical APR of 39.9%) and a credit limit that may be lower than you hoped for. However, a higher APR and slightly lower credit limit is probably a small price to pay for a credit card that could help you improve your Credit Score in the long run.

Vanquis Bank, giving people a second chance

  • You’ll start with an easy to manage Credit Limit between £150 and £1,000^.
  • You could get a Credit Limit increase after your 5th statement and further increases every 5 months, up to £3,500*^
  • A friendly UK Customer Service call centre.
  • Online and SMS Account Management.

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