Who is a credit-builder credit card for?
Credit cards to build credit can be a good choice for people looking to improve their credit score, or for people who don’t qualify for mainstream deals. If your credit score isn’t great, there are a few different reasons why this might be:
- You’ve had problems with debt in the past
- There’s an unpaid bill under your name
- You previously went bankrupt
- You have a county court judgement (CCJ) against your name
- You aren’t on the electoral roll
- You have no history of borrowing or have never had a credit card
Getting a credit-builder credit card can help improve your credit score. Other things you can do to improve your score include paying bills on time, making at least the minimum repayment every month on existing credit agreements, and registering for the electoral roll at your current address.
How does a credit-builder card work?
Credit-building credit cards – also known as ‘bad credit’ credit cards – have higher-than-average annual percentage rates (APR) and low credit limits. This means you won’t be able to borrow a large sum of money, while the interest rate will be higher than normal on the money you do borrow.
However, you can avoid paying any interest by repaying the balance in full each month. Doing this over a sustained period of time will build your credit – and make you more attractive to lenders in the future. Repaying your debt each month will show that you can handle credit and that you have your finances under control.