Bad Rating Credit Cards - A Quick Look

Writing about personal finance, there are few areas where it is most important to urge caution

, as when talking about bad rating products.

For one thing, products where are ostensibly created for those with bad ratings are not all created equally.

Now that credit is harder to obtain, a product could be branded as suitable for those with bad or poor credit ratings and not be suitable for those with no previous credit history at all or not suitable for those who have been discharged as bankrupt, even when the discharged was several years ago.

This is one of the reasons why the turn-down rate for bad rating cards tends to be high. Just because acceptance is more general doesn't mean that it's entirely without restriction as seems to be the assumption here.

Another reason for the relatively anomalously high nature of the rejection rates of bad rating cards could be that many of the applicants also have many lines of credit open elsewhere.

Again, just because these credit cards have a more open attitude to this sort of thing doesn't mean that you can just let it all hang out entirely.

Minimising other lines of credit and generally doing some credit rating housekeeping such as making sure that you're registered on the electoral roll at your current address, an address where you have lived for some time, are still a must before you make that application.

To take the open vs closed metaphor to a - not entirely logical - conclusion, think of it as the difference between a nudist beach and a nudist camp.

In the latter you could buy groceries, play tennis and other ill-advised activities without being clothed whereas in the former, though polite society has been unshackled somewhat, there are still rules.

Application criteria are then one of the main things to take into account when you compare credit cards based on this criteria.

The second point is that - just as when you compare current accounts and other basic financial products - you should be aware of the excess costs that could add up if your financial planning goes awry.

In the case of bad rating cards this would inevitably be the high interest rate. If taking a bad rating card to repair a damaged history or even just for some very short term borrowing, avoiding interest altogether is ideal.

If you're looking to borrow over the longer term taking the time to compare personal loans or considering putting the spending on hold altogether is likely to be far preferable.

by: Julia Cook

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