Credit

FACT :
Impaired credit is commonplace. The Council of Mortgage Lenders says that 130,000 households are likely to be at least three months behind on their mortgages by the end of 2007, while some 18,000 homes are likely to be repossessed. Meanwhile credit card companies are facing a wave of bad debts as well – many are writing off millions of pounds in borrowings they think can never be repaid. It all means that if you are in financial difficulties you are not alone and shouldn’t worry about any possible stigma. The crucial thing is to tell your lenders and seek help as soon as possible. Most will allow lower repayments for a while until you find your feet.



News

People with impaired credit 'can qualify for sub-prime cards'

Sub-prime credit cards can provide benefits for those who have impaired credit histories, a spokesperson from Provident Financial has said.

David Stevenson explained that it is difficult to live in the modern world without having a credit card and that people with impaired credit should not be prohibited from participating in normal activities.

"There is a whole series of people who would not normally get a credit card from a bank because they have an imperfect credit history - or they may not have a credit history," he said.

"The credit card company may look at historical information and may not be prepared to believe that the customer has rehabilitated themselves."

Mr Stevenson said that the main difference between a sub-prime credit card and a traditional one is that the sub-prime card has a higher interest rate and requires higher repayments.

Additionally, he said that this type of card comes with a "much higher level of contact with the customer" - for example, reminder to pay some part of their debt.

He added that the ultimate goal is for those with impaired credit to "rehabilitate" themselves and move on to a lower rate "over time".

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