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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? Best credit-builder card deals Who are the best credit-builder card providers?
Can I fix bad credit with a credit-builder card? Credit card for bad credit – the golden rules Credit cards for bad credit FAQs

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. If you don't know what your credit score is, find out in our guide how to check your credit score for free.

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.

 

Best credit-builder card deals

Here are our picks of the cheapest credit-builder credit cards available on the market right now.

Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms & conditions of a credit card provider before committing to any financial products.

Card Name  Features  Representative APR

Tesco Bank Foundation Credit Card 

Starting credit limit between £250 - £1,500; collect Tesco Clubcard points; no annual fee. 27.5%
Representative example: assumed borrowing of £1,200 for one year, at a purchase rate of 27.5% (variable), representative 27.5% APR (variable). Credit available subject to status. Terms apply.

Vanquis Bank Chrome Credit Card 

Starting credit limit up to £1,500; no annual fee. 29.5%
Representative example: assumed borrowing of £1,200 for one year, at a purchase rate of 29.5% (variable), representative 29.5% APR (variable). Credit available subject to status. Terms apply.
NewDay Ltd Amazon Classic Mastercard

 

More info

Amazon and New Day will end their partnership in January 2023 and all customers will be moved to New Day's Pulse cashback credit card 

 

Starting credit limits up to £1,200; no annual fee. 29.9%
Representative example: assumed borrowing of £1,200 for one year, at a purchase rate of 29.9% (variable), representative of 29.9% APR (variable). Credit available subject to status. Terms apply.
HSBC Classic Credit Card Visa  Up to £1,000 credit.  29.9%
Representative example: assumed borrowing of £1,200 for one year, at a purchase rate of 29.9% (variable), representative 29.9% APR (variable). Credit available subject to status. Terms apply.

Data correct as of 3 May 2022.

Who are the best credit-builder card providers?

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

Luckily, Which? has reviewed 26 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 our guide to the best and worst credit card providers before you commit.

You can also check out our individual reviews of each provider in our analysis. 

Can I fix bad credit with a credit-builder card?

If you've never borrowed money before or made borrowing mistakes that 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.

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 over the long term.

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 the future.

3. 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.

4. 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.

5. 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.

Credit cards for bad credit FAQs

 

Can bad credit be fixed?

 

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, your rating will also change to reflect that.

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.

 

How long does bad credit last?

 

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.

 

What is a good credit score?

 

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 TransUnion 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.

Equifax’s scoring system is out of 1,000, with anything below 438 in the poor range and anything over 811 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 more in our guide on how to check your credit score for free.

 

How can I improve my credit rating without a credit card?

 

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.

Find out more in our guide on how to improve your credit score.

 

Do credit-builder cards come with Section 75 protection?

 

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.

 

Why is my bad credit card APR higher than what I applied for?

 

Some card firms give those with poor credit histories a higher APR on the card than advertised.

That's because legally lenders only have to offer 51% of people accepted for the card 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.

 

What if I can't get a credit-builder credit card?

 

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.

Find out more in our guide on how to improve your credit score.

 

Can bad credit affect my car and home insurance?

 

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

This includes car insurance companies and home insurance companies that need to credit check you when you choose to pay for your premium in monthly instalments.

 

Will bad credit stop me from renting?

 

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 bills.

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