Avoiding Pitfalls: Tips for Using Guaranteed Approval Credit Cards for Bad Credit in the UK

For those with bad credit in the UK, guaranteed approval credit cards can be a lifeline. These cards offer a way to rebuild your credit score and access credit when traditional credit providers may not approve your application. However, like with any financial product, there are potential pitfalls to be aware of when using guaranteed approval credit cards. In this article, we’ll discuss some tips for avoiding those pitfalls.

First, let’s define what we mean by “guaranteed approval” credit cards. These are credit cards that are designed specifically for those with bad credit or no credit history. They often have higher interest rates and fees than traditional credit cards, but they offer guaranteed approval to anyone who applies. This is because they typically have lower credit limits and require a security deposit, which mitigates the risk for the card issuer.

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1. Make your payments on time, every time.

This is the most important tip for anyone using any type of credit, but it’s especially important for those with bad credit. Making your payments on time is the best way to rebuild your credit score, and it can also help you avoid late fees and higher interest rates. Set up automatic payments or reminders to ensure you never miss a payment.

2. Keep your credit utilization low.

Credit utilization is the percentage of your available credit that you’re using at any given time. For example, if you have a credit limit of £500 and you’ve charged £250 to your card, your credit utilization is 50%. Keeping your credit utilization low (ideally below 30%) can help improve your credit score and also make it easier to pay off your balance each month.

3. Avoid cash advances.

Cash advances are when you withdraw cash from an ATM using your credit card. These transactions often come with high fees and interest rates, and they can quickly add up if you’re not careful. It’s best to avoid cash advances altogether and use your card only for purchases you can pay off in full each month.

4. Read the terms and conditions carefully.

Guaranteed approval credit cards often come with higher interest rates and fees than traditional credit cards. Make sure you read the terms and conditions carefully before applying, so you know exactly what you’re getting into. Look for things like annual fees, foreign transaction fees, and penalty fees for late payments or going over your credit limit.

5. Don’t apply for too many credit cards at once.

Every time you apply for a credit card, it can temporarily lower your credit score. If you’re applying for multiple credit cards at once, it can have a significant impact on your credit score and make it harder to get approved for future credit. It’s best to only apply for one or two credit cards at a time and space out your applications over several months.

6. Use your card responsibly.

Just because you have a guaranteed approval credit card doesn’t mean you should use it to its full credit limit. Only charge what you can afford to pay off each month, and use your card responsibly. Remember that your goal is to rebuild your credit score, not accumulate more debt.

Conclusion

Guaranteed approval credit cards can be a great option for those with bad credit in the UK, but they come with some potential pitfalls. By following these tips for using guaranteed approval credit cards wisely, you can avoid those pitfalls and work towards improving your credit score.

Remember to make your payments on time, keep your credit utilization low, read the terms and conditions carefully, avoid cash advances, don’t apply for too many credit cards at once, and use your card responsibly. With time and responsible use, you can rebuild your credit score and improve your financial future.