If you’re nervous about your credit score, then the idea of “guaranteed approval” is bound to appeal. Across the pond in the US, the term “guaranteed card” typically means a secured credit card, where you put down a deposit equivalent to (or greater than) your credit limit to guarantee approval. But secured cards aren’t really a “thing” over here, so what does guaranteed approval look like in the UK?
When you’re told that you’re guaranteed or pre-approved, it’s based on what the card issuer knows about your circumstances. This could be from an existing relationship you have with it – perhaps it’s the bank you have your current account with – or perhaps you’ve used an eligibility checking service, which runs a “soft search” of your credit file (that’s a search that doesn’t affect your credit score and isn’t visible to others).
If you’ve used an eligibility checking service, the personalised results returned are a great indication of whether it’s worth applying for specific cards. The chances of approval given to you might not be 100% accurate every time, but they do offer a very sensible and informed assessment.
Receiving an actual physical “guaranteed credit card” or “pre-approved” offer in the post (and completely unsolicited) used to be shockingly normal. But now, it’s really only your own bank that might contact you to invite you to apply for an offer that it’s confident you’d be approved for. It’s likely to have selected your details from its database, perhaps from a previous application or an old credit card you had. Alternatively, it may have bought your customer details from a third party. Under GDPR (General Data Protection Regulation), companies that store your data must obtain your consent before selling your details to a third party (you may have “opted-in” at an earlier date).
Ultimately, these credit card providers use the words “guaranteed approval” or “pre-approved” to attract new customers. After all, nobody likes getting rejected. These terms can give you a strong indication of your likelihood of getting that final green light, but there are always final checks required – and a minority of applications will fall at this final hurdle.
The providers will base their “guaranteed credit card” offers on the limited information they have about you, so they may not have your current, full financial picture. This information might also be out-of-date, and your credit score could have worsened since then. This means that while you may have been eligible for a credit card in the past, you might not be now.
If you do have bad credit, all’s not lost. A growing number of cards are specifically designed for lower credit scores, but you should run an up-to-date eligibility check before you hit “apply”.
You can only be approved for a credit card if you go through the application process and meet the provider’s criteria. This cannot be done on your behalf without your consent.
Before you apply for a credit card, it’s good practice to perform an eligibility check. This is classed as a “soft search” on your credit report, which doesn’t affect your score and gives you a pretty good idea of how likely you are to be accepted, (and perhaps even your likely credit limit and interest rate, too). When you make a full application for credit (e.g., credit card, mortgage or personal loan), the lender then performs what is called a “hard search”, which does show up on your credit file.
Lenders can’t perform a search on your credit history without your consent. If you see searches on your credit record that you don’t recognise, you can query these with the credit reference agency.
Card issuers generally state the minimum criteria you’ll need to meet to apply – UK resident, over 18 and so on. Card issuers that specialise in bad credit will have a fairly short list, while the most premium cards might have high minimum income requirements or require you to be an existing customer.
Minimum credit card requirements usually include:
As part of the application process, lenders will look at your overall credit history and credit record. They’ll want to know whether you pay bills on time, whether you’ve repaid existing debts in the past, how much income you earn and how much debt you already have. Lenders are also likely to examine your spending habits.
Ultimately, a lender will want to be sure you can afford to pay back what you borrow before it gives you a credit card. Any card issuer will need to see that you have a clear source of income and that it’s sufficient to cover the potential debt that a credit card would let you get into.
Lenders will also use this information to help them determine what credit limit to give you and how much interest to charge if your application is approved.
If you know you’ve got a poor credit history, you may have been pleasantly surprised to receive a credit card offer in the post or online telling you you’ve been “pre-approved”.
Bad credit is a once-overlooked segment of the market that is now served by a number of banks and specialist lenders. But it’s still wise to be cautious and explore all your options first. Firstly, the card issuer is making you an offer based on limited information they have about your credit report. If you make an application, which will allow them to access your full report, it’s possible it could change its mind about offering you a card. Alternatively, it may offer you a different card product than the original one marketed to you.
The credit card it offers you may not be the best deal for your financial circumstances. Customers with poor credit scores can be offered credit cards with low limits and incredibly high interest. It’s always better to research what else is out there before deciding on a credit card that best suits your needs.
If you have no credit history or a poor credit score, you could struggle to be approved for mainstream credit cards. From the perspective of the credit card company, a low credit score suggests you may be a higher risk of failing to make your repayments.
One way to improve your credit score over time is by opening a credit builder card. These cards typically have low credit limits, high interest rates and few rewards but allow you to boost your credit report by making regular monthly payments. As your credit score improves over time, you may be able to progress to more mainstream credit cards with more attractive interest rates and rewards.
Credit cards for people with poor credit
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