Credit cards for bad credit

‘Bad credit’ means you’ve a credit history but you’ve made mistakes in the past, while ‘no credit’ implies that you’re young or have a limited history of taking credit out.

While it might seem unfair, if you haven’t previously had a credit card, loan or mortgage, a lender may not have the confidence that you can handle credit. A credit card for bad credit could be useful here too.

Most credit cards are easy to apply for, but most – especially those with the better terms – will take a few days to approve you. This is because card providers want to check you out before offering you a deal.

There are some so-called ‘instant approval’ credit cards which can give you a decision in as little as 60 seconds, however. If you apply for one of these, you still can end up approved, declined or referred for further review.

The best way to help make sure you’re approved at short notice is to have a high credit score.

Everyone’s likelihood of acceptance depends mostly on their credit score. So the higher your score, the more chances you have of being offered a deal on a particular card.

However, some cards, including credit-builder cards, are made for people with lower credit scores and may come with a higher chance of acceptance.

If you miss a payment on your credit card, you are likely to be charged a missed payment fee by the credit card provider. Because your outstanding balance will also remain unpaid, you’ll also start to incur interest charges. Finally, if you start to regularly miss credit card payments you could find that it damages your credit, making it harder to be approved for borrowing in the future. 

It's difficult to say for sure, especially because credit agencies uses different scoring systems and criteria.

However, with the TransUnion credit rating system we use at MoneySuperMarket, scores of 566-603 (on a scale of zero to a maximum of 710) should be enough to get you a basic credit card deal.

If you've got a lower credit rating than 566, additional information my be required to get approval.

This depends on the offers you receive after comparing credit card deals. Those with a guaranteed approval or high likelihood of approval mean that lenders may approve your new credit card either immediately or within hours.

However, if you have no credit history or bad credit score, you might have to wait longer while they check your financial history.

Credit cards for individuals with bad credit typically start with limits between £200 and £1,500, but can range up to £2,000 or even £3,000 with some lenders.

These limits are generally lower than those offered to people with good credit and strong financial history.

The specific limit offered will depend on your individual circumstances, including your income, debt, and the lender's assessment of your creditworthiness.

A credit card can help you spread the cost of small costs over a short period of time but shouldn't be used as a solution to debt.

If you make your credit card payments on time you’ll avoid paying any interest, which means you can focus on other existing debts.

However, if you don’t use the card responsibly then you’ll end up paying a much higher interest rate and owing more money – which won’t help at all.

If you've just moved to the UK and are struggling to get accepted for a credit card due to a bad credit score or no credit history, here are some steps you can take:

• Start with a basic bank account: Open a basic bank account. These accounts don't offer overdrafts or credit, making them easier to obtain and a good starting point for building your financial footprint in the UK.

• Consider a prepaid card: Use a prepaid card to manage your expenses. Some prepaid cards can help build your credit score when you top them up and use them regularly.

• Register on the electoral roll: Registering to vote in the UK can improve your credit score as it helps credit agencies verify your identity and address. Our latest study shows that the average score for people who are on the electoral roll is 41 points higher than those who are not

• Limit credit applications: Avoid applying for multiple credit products in a short period, as this can be seen as a sign that you are struggling to manage your money and so can negatively impact your credit score.

Yes, you can apply for a credit card while claiming Universal Credit. Lenders will look at your overall circumstances such as income, credit history, and ability to make repayments. But your options may be more limited, and you might be offered cards with higher interest rates or lower limits.