Credit Cards to Improve Credit Score: Cards For Consumers With Poor Credit History

Capital One’s Progress credit card is aimed specifically at borrowers who may have already have had a credit card application rejected because of adverse information on their credit report.

The Progress credit card follows the earlier launch of a similar Barclaycard product, the Initial MasterCard. It’s almost certain that others will follow

Credit Card Rejections

Louise Bond personal finance expert at uSwitch said, “With 3.32 million consumers hit with credit card rejections in the last year alone, people with a perfect credit score are becoming the exception rather than the rule.”

Capital One Progress Credit Card

Both the above credit cards give the borrower the opportunity to rebuild and improve their credit profile. It works this way. The card is initially offered at a high APR, for example the purchase and balance transfer rate on the Capital One card starts at 34.9%.

However providing the account is well managed, payments are made on time and agreed limits are not exceeded, the interest rates will, over 18 months, gradually decrease (5% every six months) to the more reasonable rate of 19.9%. Cash withdrawals will always carry the highest rate of interest.

Borrowers will also be offered, subject to certain conditions, an increased credit limit on their fourth statement, up to a maximum of £2500.

Sub-Prime Credit Card

This type of credit card offers borrowers a much less expensive option, in terms of interest payments, than a sub-prime card, which is targeted at the bad credit, credit card market. Currently this type of card carries an APR of around 40% and does not offer the possibility of rate reductions.

However before applying of this type of credit card, the first step any consumer should take following rejection of credit is to have a look at their credit report.

There are three major credit reference agencies in the UK:

  • Callcredit
  • Experian
  • Equifax

A free or low cost copy of an individuals credit report is available from the above organisations. It’s worth pointing out though, that the report will not give an indication of a person’s credit score or indeed how that calculation is made.

Improve Credit Score

Check the report thoroughly and contact the agencies to have any inaccuracies removed. Each of the three credit reference agencies may carry slightly different information. Finally, do not be tempted to go to one of the many organisations that claim to be able to ‘repair’ a credit report.

This article is based on journalistic research and does not offer financial advice.