How the right credit card can boost your credit score

Find out why taking out a credit card can help improve your credit score.

Lady using a credit card

If you have a less-than-perfect credit score it can feel like your credit options are limited. But with MoneySuperMarket’s Credit Monitor app we only show you the credit cards you are likely to get, taking away some of the uncertainty of whether your application will be accepted or not.

Building a history

Through Credit Monitor we use your credit score to showcase which cards on the market you are likely to get. If your credit score is poor, the cards you’ll be shown will most likely have the following features:

  • Low credit limit
  • High interest rate
  • Limited promotional offers (i.e balance transfer or money transfers)

These features are designed to help you manage your credit card in a responsible way.  The low credit limit allows lenders to get a view on how well you manage your account, while reducing the risk that you’ll end up in debt. Providing you consistently show you can stay within your limit and make your repayments on time, your lender could increase your credit limit or reduce your interest rate.

Alongside this, you should also see your credit score increase; as your lender will update the details it holds on you to main credit reference agencies to show that you’re using your credit responsibly.

An improved credit rating could help you later on if, for example, you need a mortgage to get on the property ladder, or you need to take out a personal loan to buy a car or make any other major purchase.

These types of cards are often called ‘credit builder cards’ and designed primarily to provide a solution for those with a low credit score, through either mismanaging their finances in the past, or through having a limited credit history.

What to watch out for

The downside of these types of credit cards is that they usually charge much higher annual percentage rates (APRs) than standard credit cards.

That means if you pay off your balance in full each month, you won’t be hit with steep interest charges. If you only make the minimum payment each month, the interest could mount up and you may struggle to repay what you owe.

If you’re worried about remembering to make monthly repayments on time, set up a Direct Debit at the outset so that you pay off your balance every month automatically.

Other ways to improve your credit score

Using a credit card responsibly isn't the only way you can boost your credit score

Credit Monitor provides you with your full credit report and score for free. We’ll update you monthly on the potential reasons why your score has changed, and personalised steps you could take to improve it.

By having access to your full credit report, you can also review the account information held about you. If, for example, your report shows that you have missed a repayment in the past, and you know that isn’t the case, you can get in touch with your credit provider and ask them to amend their records. If they won’t, you can put a ‘notice of correction’ on your report yourself, explaining why the information showing is incorrect.

Regularly checking your report will also enable you to spot if there’s been any fraudulent activity which might damage your score, such as someone opening accounts in your name.

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