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Best credit cards for bad credit

If you have a poor credit history - or no history at all - you may get rejected for the best credit card deals. One way to fix bad credit and improve your credit score is with a credit-builder credit card. 

In this article
What are credit cards for bad credit? How to fix bad credit with a credit-builder card Best credit cards for bad credit
Who are the best credit-builder card providers? Credit card for bad credit – the golden rules Credit cards for bad credit : what you need to know

What are credit cards for bad credit?

Credit cards for bad credit are designed for those who aren’t eligible for mainstream credit cards because they have a poor credit score or no credit history.

These ‘credit-builder cards’ have lower limits, higher interest rates and fewer benefits than a traditional credit card, but they will allow you to build – or rebuild - your credit rating if used sensibly.

 

How to fix bad credit with a credit-builder card

If you've never borrowed money before, or made borrowing mistakes which have impacted your credit score, you'll find it difficult to get access to credit cards and loans – especially those with the cheapest rates.

Showing that you can repay on time and stay within the credit limit you've been given will help show lenders you are a responsible borrower and give your credit score a boost.

In time using a bad credit credit card will boost your chances of being accepted for better credit cards as well as loans and mortgages with better rates in the future.

 

 

Best credit cards for bad credit

You should avoid paying interest on credit builder credit cards, but for reference these are the best credit-builder credit cards with the lowest representative APR.
Credit cardMin/max starting credit limitRepresentative APR
Vanquis Chrome 24.7% Credit Card£100-£100024.7%
Marbles Classic Credit Card£100-£1,20024.84%
Tesco Bank Foundation Clubcard Credit Card£250-£1,50027.54%
Compare more of the best credit cards for building your credit rating on Which? Money Compare.

Credit-builder cards come with manageable credit limits but these can vary between deals. Here are the best credit builders with the highest minimum starting limit.

Credit cardMin/max credit limitRepresentative APR
Tesco Bank Foundation Clubcard Credit Card£250-£1,50027.54%
aqua Classic 29.7% Credit Card

£250-£1,200

(you may qualify for an increase on your 4th statement)

29.7%
aqua Visa Credit Card

£250-£1,000

(you could get credit limit increases every 5 months up to £4,000)

29.8%

Compare more of the best credit cards for building your credit rating on Which? Money Compare.

Credit cards for bad credit are typically no-frills. These are the best credit-builder cards that come with added perks of points, cashback or introductory 0% periods.

Credit cardCredit limit    PerksRepresentative APR
Tesco Bank Foundation Clubcard Credit Card£250-£1,500-Tesco Clubcard points (one Clubcard point for every £4 spent)27.54%
aqua Reward Credit Card£250-£1,200-0.5% unlimited cashback34.9%
aqua Classic 4-Month 0% Purchase Offer£250-£1,200-0% on purchases for four months34.9%
Barclaycard Initial£150- £1,200-£10 cashback every three months for a year when you make at least your minimum payments on time (offer until 7 February 2018)
- 0% on purchases for three months
34.9%
aqua Advance Credit Card£100-£1,200-APR may be reduced to 19.9% with responsible use
-Fee-free transactions abroad
34.9%
aqua Classic With 6-Month Balance Transfer Offer£250-£1,200-0 % on balance transfers (3% fee) for six months34.9%

Compare more of the best credit cards for building your credit rating on Which? Money Compare.

Who are the best credit-builder card providers?

You’ll never know what you’re going to get with provider until you’ve signed up.

Luckily, Which? has reviewed 29 of the biggest credit providers to help you find out what they are like for customer service, cost, rewards and managing your account.

So you can check out reviews of the biggest names in the credit-builder market like Aqua, Barclaycard, Capital One, Tesco and more in the best and worst credit card providers before you commit.

Credit card for bad credit – the golden rules

#1 Avoid borrowing

Because credit builder cards are aimed at higher risk customers, APRs tend to be very high, so you should never use them to borrow.

#2 Stick to your limit

Credit-builder cards tend to have a low credit limit, and you should avoid exceeding this.

Keep on top of your spending by regularly checking your account online and don’t spend more than you can comfortably afford to repay each month.

Failure to stay within your credit limit will result in additional charges applying to your account and could make obtaining credit more expensive or difficult in future.

#2 Pay in full – or at least the minimum – on time

Pay your balance off in full and on time every month to avoid interest, and to build up a record of successfully managing credit.

If you don’t pay on time, you will lose any promotional offer, be hit with a fee and your provider will report your missed payment to the credit reference agencies, reversing any good work you might have done.

Set up a direct debit to ensure that your minimum payments are met in advance of the credit card payment date.

#3 Never withdraw cash on them

Don't use your credit-builder card for withdrawals from cash machines as it will hit your pocket and your credit rating.

Cash withdrawals on a credit card are expensive - you'll pay a fee plus interest from the moment you take the cash out until it's paid off, often at a higher rate than on spending.

The move is also noted on your credit record and is a clear warning sign to lenders that you may not be great with managing your money.

#4 Check your progress

After a few months of using your credit-builder card, it’s worth checking your credit report to see if your score has improved and where you stand in the eyes of lenders.

Find out how to check your credit score for free in our guide.

You should eventually find that you'll be able to access better credit card deals.  

Credit cards for bad credit : what you need to know

A bad or non-existent credit history can be fixed with time and some effort.

A credit score is not set in stone. It’s an ever-changing number and when your financial behaviour changes, so does your credit score.

If you manage your finances responsibly, and you don’t show reliance on credit, you are likely to be viewed by other lenders as a safe bet for new credit.

Thankfully the negative information on your credit record won’t last forever.

Searches and rejections, which show up on your report when you apply for credit, last around 12 months.

Typically things like CCJs and late payments more than seven years old (10 years for bankruptcies) must be removed from your file.

Credit scores operate on a sliding scale. The higher your score, the less risky you are deemed to be.

The three main credit reference agencies in the UK; Experian, Equifax and CallCredit have different credit scoring systems and spectrums.

For example an Experian credit score will be between 0 and 999. A very poor credit score is deemed anything below 560 – while an excellent score is upwards of 961.

However, Equifax’s scoring system is out of 700, with anything below 366 in the poor range and anything over 461 considered excellent.

You should see how you measure up across all three to get an idea of whether you have a good credit score.

Find out how to check your credit score for free in our guide.

While it's not an exact science, there are a number of specific things you can do as good practice to improve your credit score and lenders' attitudes towards you aside from taking out a credit-builder card.

This includes making sure you are registered on the electoral roll, ensuring any mistakes are rectified and ending associations with ex-flatmates or partners.

Take a look at our guide: How to improve your credit score for more.

Credit cards for bad credit come with the same powerful Section 75 protection as regular credit cards.

So if a credit card payment goes awry you can lodge a claim with your credit card provider quoting Section 75 of the Consumer Credit Act 1974.

Some card firms give those with lesser credit histories a higher APR on the card than advertised. Legally only 51% of people accepted for the card get the advertised APR.

So just because a card says it has a 34.9% representative APR doesn't mean that's the interest rate you'll get.

However, use a credit-builder card in the right way, and you shouldn't pay any interest, which means the rate you get shouldn't matter too much.

If you’ve tried to take out a credit-builder card and been rejected don’t apply again for credit as it can damage your rating further.

If it’s not essential to obtain credit you could wait a year and apply again so that the incident that has impacted your score isn’t so recent.

If you get rejected for a credit-builder card or would prefer not to take out a card you could try Credit Improver.

Credit Improver offers an interest-free loan which costs £9.99 a month. Each monthly repayment you make improves your score as it shows you can be trusted with credit.

It promises to improve your credit score with the three main credit reference agencies or you get your money back.

Alternatively you can try a prepaid credit builder card like the CashPlus Creditbuilder, which doesn’t offer a credit facility but could help improve your score.

You pay £5.95 application fee and you’ll be ‘lent’ £71.40 which you pay back in £5.95 instalments that are reported on your credit file.

A bad credit history will lower your credit score which is used by a variety of firms to establish your credit worthiness.

This includes insurers that need to credit check you when you choose to pay for your premium in monthly instalments.

It’s not just your finances that are affected when you have bad credit.

Landlords may check your credit when it comes to renting properties to check how reliable you are when it comes to paying rent.

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