A less than perfect credit history can make it harder to secure loans and credit cards. However, specialist card issuers like Vanquis aim to provide a way around this with tailored financial products that can help build or rebuild a positive credit history.
As you might expect, these cards tend to come with lower credit limits and higher APRs, but there’s good news too.
Like most cards on the UK market, provided you pay your balance in full each month, you usually won’t incur any interest at all – so a high APR might not mean anything to you in practice. Watch out for exceptions to this rule, such as non-sterling transactions or cash advances (withdrawing cash on the card).
The acceptance criteria for these cards tend to be more lenient, and it’s normally possible to find out before you apply (and without hurting your credit score) whether you’re likely to be approved, thanks to commonly used “soft search” facilities.
Annual/monthly account fees are rare in this space and your credit limit is typically reviewed sooner and more frequently.
Credit builders can be a useful tool if you use them correctly. Aim to not carry a balance from month-to-month – if you do, you’ll stand to pay a hefty amount in interest. It can be tempting to make only the minimum required payment each month (and your card issuer might love this), but that will cost you much, much more in the long run.
Due to the higher rates that apply to cards such as these, it’s often smart to think of them as a “stepping stone” product to finance agreements with better terms. In other words, if you take out a credit builder, use it sensibly and then, when you’re able, switch to a card (or other financial product) with lower rates.
If you miss a repayment, you’ll most likely incur a flat fee, pay more in interest and damage your credit record further. Pretty much every card issuer now lets you set up a direct debit for repayments, and lets you choose to set this up for either the minimum required sum, a fixed amount or the full balance. It’s a smart idea to do this as you’ll safeguard your credit record.
The Vanquis Balance Transfer Offer credit card allows you to transfer the balance of another credit card onto it, charging no interest on the balance for 6 months.
Vanquis Purchase Offer credit card lets you spread your purchase costs with no interest for 4 months.
Key information about this “credit building” card from Vanquis Bank – from rates and fees to eligibility, with a side-by-side comparison against similar cards from other lenders.