Credit cards for bad credit

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Who is a ‘bad credit’ credit card for?

A ‘bad credit’ credit card is a good option for anyone with a poor, or non-existent, credit history. A ‘bad credit’ credit card can help build your credit score if you use it sensibly by making monthly payments on time and staying below your credit limit.

Young people can use this kind of card – which is also known as a credit-builder credit card – to build up their credit history if they haven’t borrowed money before. The same goes for people new to the UK who do not have a credit record in this country.

A ‘bad credit’ credit card can also make it possible for a borrower to rebuild their credit score after bankruptcy, but you may have to wait a certain amount of time after being declared bankrupt to be considered for this type of credit card.

What are the advantages of a ‘bad credit’ credit card?

‘Bad credit’ credit cards are clearly only designed for people with specific circumstances, but if you can’t get other types of card, there are many advantages, which include:

  • The chances of being approved for this type of credit card are higher because they’re designed for people with a lower credit score
  • Some lenders may either increase your spending limit or reduce your interest rate if you continue to meet your monthly repayments and stay within your credit limit
  • Making your monthly repayments on time will help rebuild your credit score, which can increase your chances of being accepted for a credit card with a higher spending limit and lower interest rate in the future
  • ‘Bad credit’ credit cards don’t tend to come with annual fees

Credit builder credit cards are most popular for students

According to MoneySuperMarket data, correct as of June 2019

What are the disadvantages of a ‘bad credit’ credit card?

Of course, because ‘bad credit’ credit cards are designed for people with patchy credit ratings or even a history of bankruptcy, there are lots of disadvantages too:

  • These cards have higher interest rates – also known as APRs – to help lenders protect themselves in case you aren’t able to make the monthly repayments. As with every type of credit card, always try to clear your monthly balance if you can
  • There are lower spending limits to help make sure you don’t get into too much debt

If you don’t meet the monthly repayments and your account defaults, your credit card provider will let the credit reference agencies know, which means you’ll lose points on your credit score

The most popular types of credit card by tenancy status

According to MoneySuperMarket data, correct as of June 2019

How to build up a bad credit score

A ‘bad credit’ credit card isn’t the only way to improve your credit score. There are other ways – which if you’re in debt already might be better than taking out more credit. These include:

  • Paying back any money you’ve borrowed: Lenders look at any outstanding balances you have on other credit cards and loans before they decide whether or not to lend to you
  • Registering on the electoral roll: This will prove the address you give in your application is your current residence
  • Checking your credit report to make sure it’s correct: Check that any addresses you’ve lived at are correctly listed in your credit report with one of the credit reference agencies, and make sure there’s no fraudulent activity on your credit report
  • Not applying for multiple credit cards at the same time: Multiple rejections at once can bring your credit score down. If you get a rejection from one provider, it can be a good idea to wait and find out why you were rejected for that card before you apply for another
  • Making sure your credit file isn’t linked to somebody with a poor credit score: This might be the case if you’ve signed up to a joint account or mortgage with a partner, ex-partner or flatmate

Which credit card is best for bad credit?

It’s a good idea to compare ‘bad credit’ credit cards to help you get a better idea of what cards you are more likely to be accepted for before applying.

MoneySuperMarket’s credit builder credit card Eligibility Checker asks you questions about your financial situation and will show you credit cards you are more likely to be accepted for, based on what you can afford to spend and repay each month. It won’t affect your credit score.

You’ll be able to compare credit cards that are designed to rebuild your credit rating. You can sort the results by the ’highest approval likelihood’ to see the interest rates you will have to pay on any balance transfers and purchases you make. Click into’ ‘full product details’ to see the terms and conditions for that card, and any fees and features that come with it.

MoneySuperMarket is a credit broker – so we’ll show you products offered by lenders, and we will never take a fee from customers for this broking service. Instead we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.

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