Credit cards for people who have poor credit rating (UK only)

Many people across the UK have a poor credit rating, particularly in the wake of the global financial crisis ' and unfortunately, this can be a significant hindrance when it comes to applying for credit.

Whether you wish to borrow for a mortgage, personal or car loan or a credit card, a damaged credit rating demonstrates to lenders that you are a risky proposition.

There are many ways you can end up with a poor credit rating, such as county court judgments (CCJs), credit or loan defaults, mortgage arrears, bankruptcy, individual voluntary agreements (IVAs) or missed/late payments on credit cards or loans.

Are you ready for the good news, though? Just because you have an adverse credit score, doesn't mean no lenders will consider extending credit to you.

Credit cards are still available to those with lower credit scores ' it's just that the interest rates and fees attached will almost always be higher.

Capital One's Classic Mastercard is one such card that is aimed at those who wish to establish or re-build their credit history.

The card offers a credit limit starting at just £100, and no annual fee is payable. The sting in the tail is in the initial annual percentage rate (APR): at 34.9% it is very high, especially when compared to the 15.9% offered to applicants with a perfect credit rating. However, this high interest rate is necessary to enable the credit provider to extend credit to riskier applicants.

These credit card accounts allows you to slowly and responsibly rebuild your credit rating from the ground up. Credit limit increases are available after four months of making regular repayments, up to a maximum limit of £2,500.

Also, no interest is payable on purchases if you pay in full the outstanding balance on your first statement by its payment due date. Thus, provided you manage your account correctly and pay the outstanding balance in full each month, the high interest rate shouldn't be a problem for you.

The purpose of this card is to help you establish a steady payment record and prove to the banks and credit providers that you have become a responsible, low-risk credit proposition.

Once you have achieved this and shown that you can make regular repayments on time each month, you will be able to use your new, healthy credit rating to secure a credit card account with a lower interest rate.