Credit builder credit card
Build up your credit rating with one of our selection of credit cards for people looking to improve their credit rating or take out their first card. Compare cards with the best deals on purchases, the lowest standard rates and the best cashback or rewards offers.
If you have had problems with debt in the past, it is likely that your credit score will have been damaged. A low credit rating affects your ability to borrow and obtain competitive deals on credit cards, with lenders being wary of anyone with a less than perfect history.
However, there are other things that can affect your credit score too, such as having little or no history of borrowing. It might seem strange that you could never have had a problem with debt and still have difficulties getting credit, but if you’ve never borrowed providers have no indication of whether or not you are a responsible borrower and so steer clear of lending to you or giving you a credit facility.
Whatever your reason is for a having bad credit, it doesn’t need to be permanent. It is possible to repair your score, and one of the ways to do this is by getting a credit builder credit card.
What are credit builder credit cards and what advantages do they offer?
A credit builder credit card is a type of card available to those not likely to be accepted for more mainstream deals.
They are beneficial as they give you access to credit but, providing you make repayments on time every month, you can, over time, prove you can manage money responsibly.
The downside to these cards is that they have very high rates of interest which reflects the risk that providers are taking. However, as long as you ensure you clear your balance every month, you won’t have to pay a penny in interest.
The other downside is that they are also likely to have relatively low credit limits. But once you have re-built your score you should be able to qualify for better deals.
If you do have a low credit score, don’t be tempted to try to apply for one of the more competitive deals. Every time you get rejected, it further damages your score, meaning it will take even longer to get back on your financial feet.
If you are not sure what cards you are likely to qualify for, using MoneySupermarket’s Smart Search tool will give you an idea of the cards you may be accepted for. Alternatively, you might wish to apply for your credit report which will allow you to see in detail what your score is and monitor it on a regular basis.
But credit cards are not the only option for those looking to restore their credit score. Some prepaid cards, which require you to load up cash on them before you spend, also offer a bolt-on Creditbuilder facility. This is where the card provider effectively ‘lends’ you a year’s worth of monthly card fees upfront. The loan itself is interest-free but you will be expected to pay it back over the course of 12 months. Details of how reliable you are with your payments will be passed to credit reference agencies and, if it’s positive, could help boost your credit score. This means you can help yourself without risking getting into debt or paying any expensive interest.
Comparing credit builder cards
Using MoneySupermarket will allow you to compare credit builder cards and find the best deal for you.
Different cards will come with different rates of interest and some will even come with added benefits, such as the ability to earn rewards. MoneySupermarket’s credit builder card channel will allow you to browse and weigh up which one could be the best deal for you.
It’s imperative, though, that once you have chosen a card and been accepted, you use it to your advantage. Defaulting on payments will result in you paying hefty rates of interest and getting caught in a debt cycle again – not to mention further damaging your score.
The bottom line is that, if you want to be eligible for competitive deals in the future, having a good credit score is imperative.
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