This is a paid guest article by Score Mastercard
Having a poor credit score is frustrating. Rejected loan applications when you need to obtain a source of credit can severely impact your quality of life. Undoubtedly there are many reasons why your score may not be the best, including some that are out of your control, but we are not here to judge. Whatever the source of your poor credit score—whether that’s poor financial decisions, job loss, or a divorce—at DND, we simply want to help. DND founder, Bill Dost, was in your exact situation 20 years ago. He needed to fix his vehicle and was denied a loan because his credit score was not high enough. Feeling motivated (and maybe a little embarrassed) by the loan rejection, he decided to build his credit score from that day forward. Essentially, he has done all the research into ways to build a good credit score so you don’t have to!
All the leading credit rating agencies rely on similar criteria for deciding your credit score. The most important factor is your credit history. When you borrowed money in the past, did you make your repayments on-time or did you miss some payments? A good credit history will consist of mostly on-time payments. As soon as you miss a payment your credit score will take a hit. Miss several in a row and you’re risking dropping into the “Poor” credit score range. Once your credit score is in the Poor or Very Poor range, you will find it very hard to get approved for any form of credit. If you are lucky enough to find someone willing to loan to you, it will likely come with sky-high interest rates and you could find yourself in a hole that becomes impossible to dig yourself out of.
So, what happens when a good credit history is needed to build your credit score, but no one will approve you for any credit products to start building your credit history?
That’s where a secured credit card comes in.
What is a secured credit card?
A secured credit card is one the best tools for building credit, regardless of your financial past. It works like a regular credit card but with some key differences.
- Where a secured card is similar to a regular credit card is that your spending habits and repayment behaviour while in possession of a secured credit card are reported to all the main credit agencies. This ensures you are building credit history which is the most important factor a lender takes into consideration when deciding whether or not to loan to you.
- Where a secured credit card differs in comparison to a regular credit card is the level of risk involved. A regular credit card is unsecured. That is, no deposit is required to obtain one. This is why they are usually reserved for people with good credit scores as the lender can be confident that they will be repaid the amount loaned. If the borrower is unable to make repayments, they could find themselves with insurmountable debt that they cannot repay. A secured credit card, however, requires a deposit to be made. Sometimes the deposit is a percentage of the amount of credit being extended, and in other cases it is 100% of the amount of credit on offer. This means the lender can be confident there is no risk of losing the amount loaned because the deposit will cover any defaulted payments (once the account is closed). It also means there is no risk of getting into debt for the borrower.
It’s important to note that while there is no risk to the borrower of falling into deep debt, if regular payments are not made, there is risk of damaging your credit score. Like a regular credit card, on-time payments are required with a secured card in order to build credit history, and to positively impact credit score. If payments are not made on-time, it will negatively affect your credit score, just like a regular credit card.
Why the Score Mastercard?
The Score Mastercard is a secured card that was created specifically to help people with poor credit build their score and create a more secure financial future for themselves and their family. Imagine having a credit score that brings credit providers to you with offers, rather than being the source of credit rejections.
An Affordable Credit Card Solution
The Score Mastercard has a comparatively low APR making it one of the most affordable secured credit cards currently on offer in the UK market.
You are in Control
- Make purchases without paying interest: Instead of charging interest on your purchases, the Score Mastercard charges one monthly fee of £19.99 (£50 for corporate clients). We are transparent when it comes to any fees that have to be charged so you can find all the secured card fees laid out clearly and concisely on DND’s website.
- Set your own credit limit: With the Score Mastercard, you determine your own credit limit based on the amount of your security deposit.
- Determine the exact day that you pay on your billing cycle: We let you choose your billing day in the month so you can ensure you have the funds to be able to pay it off.
- Earn money while you spend. Even a secured credit card can come with rewards! Receive cash back rewards annually based on 1% of annual spending.
With responsible use, the Score Mastercard can help to give your credit score a boost by allowing you to safely create a history of positive credit repayments, without any risk of going into debt.
How do I apply for a Score Mastercard?
You can apply for a Score Mastercard by completing our online application today for a better financial tomorrow!
MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.