What Are Guaranteed Acceptance Credit Cards
Have you had applications for credit cards turned down? If you have, then you're in the majority! On average only one in every four applications in the UK are accepted by credit card companies.
Reasons why applications are rejected are numerous - some applications are declined because of the applicant's poor credit history, others because applicants do not score highly enough on credit scoring systems administered by the companies. Even if you have no credit history at all, you may still find that companies reject your application, simply because they do not know enough about you.
For card companies it's all about risk…and if you're too high a risk in their eyes, they're not going to issue you with their credit card.
So, what can people who are refused do about this situation? The answer is to seek out credit cards where acceptance is guaranteed.
What are 'guaranteed acceptance' credit cards?
Guaranteed acceptance credit cards are exactly as their name suggests - they are credit cards where applicants who apply are guaranteed to be accepted.
Issuers of guaranteed acceptance choose to evaluate applicants using different criteria to the mainstream companies. They will take into account non-credit related factors, such as your marital status, how long you've been living at your current address, and the stability of your employment. In fact, some issuers of guaranteed credit cards may choose not to consider an applicant's credit history at all.
This is of course great news for people who have been refused on the grounds of a poor credit record. Given that companies who offer guaranteed acceptance credit cards accept everyone who meet their basic application criteria, people who have been refused by mainstream companies in the past will now have little difficulty in securing cards in their own name.
Costs associated with guaranteed acceptance
These types though come at a price. To activate guaranteed cards users must first place a security deposit on their account. This typically ranges between £50 - £250, the higher deposit amount being required from people who are deemed by the company to pose the highest credit risk.
Credit limits on guaranteed acceptance credit cards are lower too than on mainstream cards, and cash advances from ATMs are limited to around 50% of the available credit limit.
Another point to note is that you risk getting into a whole heap of trouble if you start missing repayments on these. Always make sure that you meet at least the minimum repayment amount required, as companies who deal with guaranteed acceptance cards tend to have a stricter credit control regime than some mainstream companies.
Despite these limitations, guaranteed acceptance cards are good to have if you've been struggling to obtain credit through mainstream companies. One thing's for sure, these offer hope to many thousands of people who want to buy goods and services on credit and build a good credit history by using these credit cards.
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