If you have a bad credit history – or none at all – you may be turned down for the best credit card deals. One way to repair damaged credit and boost your credit score is to use a credit-builder credit card.
What are credit cards with bad credit?
People who are unable to receive regular credit cards due to a poor credit score or a lack of credit history are eligible for credit cards for bad credit.
These ‘credit-builder cards’ have lower credit limits, higher interest rates, and fewer features than conventional credit cards, but they can help you build – or rebuild – your credit rating if you use them wisely.
Deals on credit cards that help you build your credit
Here are our picks for the top credit-building credit cards currently available.
Please bear in mind that the information in this article is intended to be informative primarily and should not be construed as advice. Please read the exact terms and conditions of a credit card issuer before committing to any financial products.
| Card Name | CHARACTERISTICS | Representative APR | |
|---|---|---|---|
| Tesco Bank Foundation Credit Card | Start with a credit limit of £250 to £1,500 and earn Tesco Clubcard points. There is no annual charge. | 27.5 PERCENT | |
| Assume a one-year loan of £1,200 at a purchase rate of 27.5 percent (variable), with a 27.5 percent annual percentage rate (APR) of 27.5 percent (variable). Credit is available on a case-by-case basis. | |||
| Vanquis Bank Chrome Credit Card | Starting credit limit up to £1,500; and no annual fee. | 29.5 PERCENT | |
| Representative example: assumed borrowing of £1,200 for one year, at a purchase rate of 29.5% (variable), representative 29.5% APR (variable). Credit is available subject to status. | |||
| NewDay Ltd Amazon Classic Mastercard |
|
29.9 PERCENT | |
| Representative example: assumed borrowing of £1,200 for one year, at a purchase rate of 29.9% (variable), representative of 29.9% APR (variable). Credit is available subject to status. | |||
| Virgin Money | Virgin Money 12 Month Balance Transfer Credit Card OR Mastercard | 29.9 PERCENT | |
| Representative example: assumed borrowing of £1,200 for one year, at a purchase rate of 29.9% (variable), representative 29.9% APR (variable). Credit is available subject to status. | |||
The information is valid as of April 1, 2022.
What are the best credit cards for establishing credit?
Until you sign up with a provider, you won’t know what you’re getting.
Fortunately, we compared 26 of the most popular credit cards in terms of customer service, cost, rewards, and account management.
Can a credit-builder card assist me in repairing my bad credit?
You’ll have a hard time getting credit cards and loans, especially ones with the lowest interest rates, if you’ve never borrowed money before or have made borrowing mistakes that have severely harmed your credit score.
When you demonstrate that you can pay on time and stay within your credit limit, lenders will view you as a responsible borrower, which will enhance your credit score.
Using a credit card with a bad credit score will increase your chances of being approved for better credit cards in the future, as well as lower-interest loans and mortgages.
The credit card golden rules for people with weak credit
1. Never take out a loan.
Credit builder cards’ annual percentage rates (APRs) are often very high because they are designed for higher-risk consumers, therefore you should never use them to borrow money for a long period of time.
2. Establish a personal limit.
Credit-builder cards often have a limited credit limit, which you should avoid exceeding.
Check your account online frequently to keep track of your spending, and don’t spend more than you can comfortably return each month.
Failure to stay within your credit limit will result in additional charges being charged to your account, either raising the cost or making it more difficult to acquire credit in the future.
3. Pay on time and in full – or at the very least the minimum amount owed –
Pay your payment in full and on time every month to avoid interest and develop a track record of good credit management.
If you don’t pay on time, you’ll forfeit any promotional offers you’ve received, be charged a fee, and your provider will report your late payment to credit bureaus, ruining any good work you’ve done.
Set up a direct debit to ensure that you pay your credit card minimum payments before the due date.
4. Never take money out of their account.
Making cash machine withdrawals with your credit-builder card will affect your pocketbook and your credit score.
On a credit card, cash withdrawals are expensive; you’ll be charged a fee as well as interest from the time you take the money until it’s paid off, which is often higher than the rate on spending.
This action is also noted on your credit report, and it acts as a strong indication to lenders that you may not be a good money manager.
5. Keep a record of your accomplishments.
After a few months of using your credit-builder card, check your credit report to determine if your score has improved and where you are in the eyes of lenders.
For people with bad credit, there are credit cards available.
Is it feasible to fix a bad credit score?
A bad or non-existent credit history can be fixed with time and effort.
A credit score isn’t a number that can be calculated. It’s a moving target, and your score will adjust to reflect any changes in your spending habits.
If you manage your money well and don’t rely on credit, you’ll be considered as a safe option by other lenders for extra loans.
What is the average length of time that negative credit lasts?
Fortunately, the negative information on your credit report will not be on your credit report eternally.
Credit searches and denials stay on your record for around a year after you request for credit.
CCJs and late payments older than seven years (ten years for bankruptcy) must normally be removed from your record.
What does having a good credit score imply?
On a scale of one to ten, credit scores are determined. Your score indicates how dangerous you are. The higher your score, the less hazardous you are rated.
The three major credit reference firms in the United Kingdom, Experian, Equifax, and TransUnion, each have their own credit rating systems and spectrums.
For example, an Experian credit score can vary from 0 to 999. A credit score of less than 560 is regarded poor, while a score of more than 961 is considered excellent.
Equifax has a 1,000-point rating system, with anything below 438 being regarded poor and anything above 811 being considered exceptional.
Look at how you rank in each of these categories to see if you have a good credit score.
How can I improve my credit score if I don’t have a credit card?
Aside from utilising a credit-builder card, there are a few things you can do regularly to improve your credit score and lenders’ perceptions of you.
This entails checking your registration on the electoral roll, rectifying any inaccuracies, and breaking up with ex-flatmates or partners.
Do credit-builder cards come with Section 75 protection?
Credit cards for those with bad credit have the same Section 75 protection as conventional credit cards.
Why is my bad credit card’s APR higher than the APR on the credit card I applied for?
Customers with poor credit histories may be charged a higher APR than reported by some credit card firms.
Because lenders are only required to offer the specified APR to 51% of people who are authorised for the card, this is the case.
So just though a credit card boasts a 34.9 percent sample APR doesn’t mean you’ll end up paying that much in interest.
However, if you utilise a credit-builder card properly, you should be able to avoid paying interest, so the rate you receive shouldn’t be that important.
What if I don’t qualify for a credit-builder card?
If you’ve been turned down for a credit-builder card, don’t apply for extra credit because it will just lower your credit score.
If you don’t require credit immediately away, you can wait a year before applying again, allowing the incident that has harmed your credit score to fade away.
Is it true that having bad credit affects my auto and house insurance rates?
Your credit score, which is used by many organisations to establish your reliability, will be lowered if you have a bad credit history.
Will my bad credit make it difficult for me to rent?
When you have bad credit, it has an impact on more than simply your finances.
When it comes to renting a home, landlords may do a credit check to determine your ability to pay your bills on time.
