How to Get a Credit Card with Bad Credit

Your Options Explained

Poor credit score

It is a common misconception that the only people who have problems getting a credit card are those that have a bad credit score due to a record of previously missed credit repayments on their credit report, but this also applies to people who have no credit score or history to date.

People who are new to borrowing money with creditors and lenders (usually younger people aged 18 to 25) do not have a record of using credit at all because they haven't yet had the chance to sign up to any finance deals, make monthly repayments and build up their score.

So, when credit card companies get in touch with credit reference agencies (CRAs) to check the applicant’s score and there is no proof that you’re a reliable borrower, they will be hesitant and possibly unwilling to take the risk of providing a credit card to someone who they cannot guarantee will make every monthly repayment on time and in full.

So what are your options if you have a bad credit score or no credit score at all? We explain all you need to know here.

How to get a credit card with bad credit (or no credit history)

Credit cards for people with a bad (or no) credit history are becoming more widely available, although as a rule, lenders do charge higher rates of interest than standard cards (some as much as 60%) to account for the risk they're taking, which is lending money to someone they cannot fully guarantee will repay it back on time and in full.

Generally though, many providers will each have their own criteria for accepting applicants, so it all depends on your individual circumstances.

A common requirement is that you have not had a County Court Judgement (CCJ) recorded against you in the past 12 months or been declared bankrupt.

Many cards are operated by the more mainstream companies who, when you have a sufficiently good record, will allow you to switch to their standard cards.

As with every card issuer, you need to look at the terms offered and find the one that suits your needs and circumstances best.

What is the best credit card for bad credit?

Credit builder card

According to industry experts such as Experian and Which?, the best type of card for people with bad credit is a credit builder card.

This is specifically designed for people who are unable to get any other type of standard credit card due to a low credit score and/or bad financial decisions made in the past that has damaged their credit report.

It is also available to help consumers with no credit history get started on building up their credit rating for the first time.

To make up for the increased risk of providing a credit card to someone who has a bad credit rating or a non-existent one, a credit builder card comes with high interest rates and lower availability limits, which helps to make sure that the card-holder doesn’t spend too much at once or spend more than they can afford to repay in one month.

Unlike other standard mainstream cards, a credit builder doesn’t often come with any benefits or ‘new customer’ incentives, but it does give you the chance to improve and build your credit score back up – provided it is used sensibly and all repayments are made on full and in time.

If you are struggling financially, make sure that you at least make the minimum repayment every month, but just remember that you will have to pay the interest on any amount remaining after that. For this reason, it is always best to repay every amount in full if you can, to avoid paying any interest on top.

Find out more about credit builder cards in our Complete Guide to Credit Builders.

Do prepaid cards build credit?

No. With a pre-paid card, you are not borrowing money or credit from a lender – instead, you add money onto it yourself and you can only spend that amount. You don’t have to spend all of it, of course, but you can’t spend any more than the amount you have put on there.

As you are not borrowing money from a bank and paying it back on a monthly basis with a prepaid card, your activity with this card is not reported to the credit reference agencies so it won’t affect your credit score at all.

Find out more about prepaid cards and others in our guide here: What’s the Difference Between Credit Cards and Prepaid Cards.

How to improve your credit score with a credit builder card - The best way to use it

Building your score with a credit-builder will only happen if you do what you’ve agreed to do, which is:

  • Pay off your balance, or at least the minimum payment by the agreed date, every month.
  • Do not spend more than the credit limit – If possible, try to use 25% of your availability or less each month.

If you can pay every monthly payment in full, you will not only avoid interest, but this will be recorded on your credit report and will show that you are a responsible borrower, consequently increasing your score as a result.

It’s important to remember, though, that your score will probably not increase overnight; it’s going to take a little time and commitment from you to keep up with every monthly payment in full. Depending on your own personal financial situation and history, it could take a few months or more, even up to a year for many people.

While this may seem frustrating, a bad credit credit card is one of the only ways to build your score back up again, or at least to start building it for the first time. See below for other ways of improving bad credit.

Credit card builder providers

According to experts at which?, the best companies that provide credit card builders are:

  • Aqua
  • Barclaycard
  • Capital One
  • Tesco

Other well-known providers include Vanquis Bank (Origin and Chrome), Aquis and Aqua.

Other ways to improve bad credit

While it is one of the best ways, a credit builder credit card isn’t the only way to improve your credit rating; there are other ways to improve your score:

  • Make sure you are registered to vote on the electoral register.
  • Pay all of your bills on time and in full if you can.
  • Check your credit score and report regularly and address any problems such as fraud or negative financial ties, such as a joint account with an ex.
  • Don’t apply for lots of credit in one go – this will stay on your report and hinder any chances of borrowing or getting loans or credit cards in the future. If you're using an eligibility checker or something similar, make sure they are carrying out a soft search that won't impact your score.

Read more: 10 Hacks for Improving Your Credit Score

At Bobatoo, we recommend checking your score with Checkmyfile as it uses all four credit reference agencies in the UK to give you a detailed report – this way, you know what lenders can see when checking your creditworthiness and you can spot any mistakes or rectify anything that may be preventing you from improving your score.

Signing up is free for the first 30 days and you can make use of Checkmyfile’s services should you need any help or tips on bumping up your score. If you don’t want to pay £14.99 every month after the free trial, simply cancel before the 30-day period ends.

Check your score now or get more help and advice from our useful guides below.

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