Bad Credit History

When you apply for a credit card, your credit score is calculated and if you pass a certain score (decided by the card issuer), your application will be successful. If your credit score isn't high enough, you will be rejected. If you have been rejected in the past or are having difficulty being accepted for a credit card which offers a competitive rate of interest, its probably because of credit problems in the past.

People with a history of bad credit usage are often described as having 'adverse credit'. A poor credit history can include County Court Judgements (CCJs), defaults and arrears, late payments and bankruptcy. When an individual makes an application for a credit card, the issuer has the facility to search the person's credit files to determine whether they are credit worthy or not. The information contained in the files may then be used as part of the credit card issuers decision making process. 

A borrower is described as being 'in arrears' when they have fallen behind in their repayment schedule. The amount of arrears is typically measured in months or pounds (e.g.) 6 months arrears means the borrower is six months behind with their repayments. This does not automatically mean that the borrower has their term extended in order that they can repay their debt, as often a lump sum payment is required to clear the debt accrued. 

A corporation, firm or individual is described as being 'bankrupt' when they are relieved from paying all debts once their assets have been surrendered to an appointed third party. Bankruptcy proceedings are managed via the court system, with the appointed third party designated by the court in charge of the proceedings. 

County Court Judgements (CCJ) 
This is an adverse ruling by a County Court against an individual who has not satisfied their credit agreements and who has not made the necessary debt repayments to their creditors. Once the ruling has taken place it will be recorded against the person's credit history and will appear on every credit search for the next seven years. This may affect the quality and the quantity of the credit facilities available to the individual, as they are likely to be classed as a higher risk proposition. 

If a person fails to make payments on a credit agreement, or fails to comply with their creditors requirements, they will be described as having 'defaulted'. Defaults can, over time, lead to County Court Judgements if the individual fails to satisfy the terms laid down by their creditor. Defaults are recorded on a person's credit file to enable lenders to assess whether they are a viable lending proposition. 

No Credit History / Near Prime 
People who have no previous or existing credit agreements in place may find it difficult to obtain credit. This is because they have no credit history and lenders are unable to assess whether they are reliable payers or a good risk. Self-employed individuals may also find it difficult to obtain credit, as there is a higher risk of non-payment due to annual earnings being non-guaranteed. Some lenders do offer products designed to 'build your credit rating', and although their terms may not be as attractive as those of the products offered to prime applicants, they do offer individuals the chance of building a credit history. 

If you have experienced any of the above, its likely you may have been refused a credit card. However there are now a number of credit card companies who invite credit card applications from people who have experienced credit problems in the past. 

Risk Based Interest Rate
More and more credit card applications are being decided using a system known as risk based interest rate assessment. This means that best rates for interest are likely to be available only to people with a good credit rating. If your credit score isn't high enough, your application will not necessarily be rejected, instead you may still be offered a card, but at a higher interest rate.

Credit Cards with a bad credit rating
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