If you were rejected for a credit card, hold fire before applying to another one. Being rejected for a credit card actually hurts your credit score. So now you need to build it back up to where it was and then build it some more. There is no overnight fix, but there are proven approaches that can improve your score over a few months.
You may have heard about using credit builder cards like Aqua card as a solution. These are credit cards that provide people with bad credit an opportunity to prove their credit-worthiness. Card owners can access low credit limits (you won’t be able to borrow much money on the card each month) and there is a high interest fee (an APR) for any unpaid debt at the end of the month.
But if you pay off your debt each month and avoid any interest fees for several consecutive months, you will see your credit score rise. When the score is high enough, you are more likely to be approved for another credit card with better borrowing limits and lower interest rates.
The Aqua card
For many, credit building cards like the Aqua card is a helpful route to build up a bad credit score over time. The Aqua card works like this:
Check the eligibility calculator on Aqua Card’s website before you apply – this will give you a good idea if you will be approved or not. When you apply it runs a soft credit check on your finances. This does not show on your credit history or damage your credit score.
If approved, Aqua card has two account options: Classic and Advance. The main difference is that Aqua Classic has a representative APR of 37.9%. Aqua Advance has a slightly better representative APR of 34.9%, plus it has benefits like fee-free spending abroad and access to a credit report via CreditView.
As with other credit cards, you can use it to pay for items each month and you must repay your debt at the end of each month.
Before you apply for the Aqua card
You should know what to watch out for when applying for an Aqua card or other credit cards for rebuilding credit.
- Check your credit score so you know where you stand and how much room for improvement you want to achieve. This is free and easy to do with the credit sites Experian, Equifax and TransUnion (formerly Callcredit). If your score is poor, you will have to spend more time building it up to good standing.
- Assess your financial realities. Sometimes your credit score is bad because it accurately reflects a poor financial situation or a history of late repayments. If that’s the case, figure out how and why that is. You can use a free app like Money Dashboard which will show you your spending and repayment history, so you can see exactly where things are going wrong and where you can improve.
- Don’t apply and use a card unless you are ready and able to repay it in full every month – this is better than repaying the minimum and how you will improve your credit score. You also want to avoid interest rates on any unpaid debt at the end of the month that will worsen your financial situation.
It is also wise to consider other means of building your credit besides opening a credit building card, which are outlined in our articles on How to build your credit score and on How to improve your credit score fast. If you do choose to open an Aqua credit card or other credit card for bad credit history, you can add your account to Money Dashboard to keep an eye on your spending.