Can you get a credit card with bad credit in the UK?
Yes, it’s definitely possible. There are some additional pitfalls, however, that you must watch for when securing a credit card if you have poor credit.
While credit cards are often the source of a poor credit score, used properly a credit card can actually help repair a poor credit score. It can also help build credit if you have little or no credit history.
If you’re looking for a card that’s right for you, you’ve come to the right place. This page lists credit cards that we’ve confirmed accept applicants that have poor credit scores or a limited credit history. If your poor credit score is due to existing debt, check out our credit card repayment calculator to determine how much cash is needed to pay off your balance in full.
What is a credit builder credit card?
Now that we’ve answered that it is often possible to get a credit card even if you have a poor credit score, let’s talk about the type of credit card you’re most likely to get.
Credit cards for bad credit are aimed at serving people with a limited credit history or lower credit scores. Credit builder cards typically offer lower, more manageable credit limits, have lower eligibility criteria for applicants and have a higher APR than most credit cards. Some of these cards will approve you even if you’ve had a CCJ, default or bankruptcy in the past.
These cards are designed to encourage good borrowing practices. Some cards even increase their credit limits or lower their APR if you display the desired borrowing behaviour like keeping within your credit limit and making your monthly payments on time.
Knowing which cards will give you the highest chance of approval is key and will help you make the first step towards improving your credit score. That’s why we’ve shortlisted top cards that are likely to accept you despite a lower credit score or a limited credit history.
Which banks offer credit cards for bad credit?
There are certain credit card issuers in the UK that focus more on offering solutions for people with lower credit scores. New Day, for instance, offers the aqua and marbles brand credit cards, both focused on helping people build credit. The same is true of Vanquis Bank and its credit cards.
However, High Street banks like Barclaycard and store brands like Tesco also can be found offering credit cards for those with less than perfect credit. Which means that it’s helpful to consult a price comparison site to find a card, rather than try to guess which bank might have a card that fits your situation.
How we picked our top credit-builder cards
You may feel pushed into a corner with not many options if you have no credit history or have a poor credit score, but you don’t have to feel that way. There is more variety than you would expect in the market.
Here are the criteria we used to sift through the cards for those with poor credit histories.
- A high chance of approval – Cards that have lower eligibility criteria and for which your application is more likely to be considered, even if you have had financial issues in the past or are on a low income or a student. This may mean you’ll get accepted despite a lower credit score, but it may even mean getting accepted despite having a CCJ, bankruptcy or default in your credit history.
- Potential to build credit over time – Cards that offer the chance to improve your credit score and potentially unlock further credit in the future. We gave extra points for cards that make this easier for you to do by providing you with your credit score on an ongoing basis, or using technology to help you monitor your spending.
- No annual fees – You shouldn’t have to pay fees just to increase your credit score. And let’s be honest, nobody likes paying an annual fee, full stop!
- Extra benefits – Make no mistake about it, you’re not going to find rich rewards, sign-up bonuses or long 0% interest periods on credit-builder cards. But some cards do offer some form of rewards or 0% period. Naturally we gave a ratings bump to cards that provide you the chance to build your credit and give you bonus features.
This certainly isn’t an exact science and a card will be right for you if it fits your personal circumstances well. But we believe that cards that have a good mix of the above could be a good match for many people who have less-than-stellar credit.
7 tips for applying for a credit-builder card
1. Don’t apply for cards that are out of your reach, or submit many applications
Since you’re reading this, you’re starting on the right foot. If you know you have a poor credit history, applying for credit cards that require good or even fair credit scores will lead to not only frustration, but will likely hurt your credit score further. Each credit card application that you make has the potential to lower your credit score. So applying for a card that’s out of reach may result in a rejection and make it even harder for you to get a card.
What follows from this, is that no matter what kind of card you applied for, if you apply for a credit card and get rejected… stop! Don’t rush to apply for another card, in hopes that the result that the outcome will be different. It may be different, and you may get approved for a different card (we hope you do!), but if you’re upset about being rejected and rush to submit another application, you may only risk damaging your credit score.
Instead, take a step back. First, consider whether you were applying for a card that required better credit than you currently have. On The Motley Fool, every credit card has a slider that shows what level of credit is typically required. If you have poor credit, but have applied for a card that requires good credit, that could be your problem. You can also contact the card issuer and ask them why you were rejected. They may not give you super-specific feedback, but it could help you better consider why your application was rejected.
Once you’ve taken some time to consider why your application was rejected, you can start to look through other credit cards on the market to consider what cards are more likely to accept you.
Once you’ve done that, be sure to…
2. Use eligibility checkers
It’s preferable that you do this from the very beginning, but if you’ve already applied for a card and been rejected, it’s not too late.
Almost every issuer provides an eligibility checker on their site. The eligibility checker performs a ‘soft check’ to determine with a reasonable degree of likelihood whether you’d be accepted for the card. The good news about a ‘soft check’ is that it doesn’t hurt your credit, even if it returns bad news.
If you’re weighing your options and trying to figure out which card is right for you and which will accept you, then running through an eligibility check can help with this. If you’ve applied for a card already and been rejected, using an eligibility check is definitely recommended, as it could help you find a card that will (likely) approve you without further hurting your credit.
3. Be aware of the APR
Typically, cards designed for those with no credit history or a poor credit history carry a higher APR that other credit cards. However, within the market itself, there will be cards that sell themselves on having a comparatively low APR.
If you are looking to pay off your balance in full in each month, then you shouldn’t be caught out by the high interest charges. Most cards come with a standard 45- to 56-day interest-free period on purchases, provided you pay your balance in full. However, if you are only able to make the minimum payment each month, do be aware of what APR the card carries and therefore what interest will be charged on your remaining balance. Please be careful here, as interest charges at these levels can add up very fast, and so carrying a balance should be a last option.
Also look for cards that offer the chance to reduce your APR over time if you display good borrowing practices. Similar to the idea of rewarding borrowers with increased credit limits, some cards will instead reduce your APR in stages provided you stay within your credit limit and pay your monthly balance.
Finally, be aware that the ‘Representative’ APRs that you see on The Motley Fool or elsewhere are the rates that 51% of applicants will get. You may think that the APRs on many credit-builder cards look sky high. But, believe it or not, the APRs can go higher. For a card with a Representative APR of 34.9%, for example, some applicants may be offered an APR of 59.9%. In this case, you may want to reconsider whether you really want that card, or at least be very very careful about carrying a balance on such a card.
4. Be careful of introductory 0% interest periods
If you are currently having financial or credit problems, then getting an introductory period of 0% interest, either for new purchases or for balance transfers, may sound great. The bad news is that credit-builder cards rarely offer long 0% periods. The good news, however, is that some do offer 0% interest periods. These 0% periods won’t be long, but even a few months without interest could provide breathing space.
Now let’s say you did get approved for a credit-builder card with a 0% interest period. Great news, right? Yes. But be aware of exactly how long the introductory period is. If you do not pay off your balance in full before the end of the period you will be charged the card’s standard APR, and it could impact your credit score. That could get costly in multiple ways.
So if you do get a card with a 0% period, be sure to mark the end of that 0% period on your calendar, and be sure to have your balance paid down by then.
5. Look for free credit reports and other credit-building services
One of the best ways to improve your credit score is to know what is going on with it. Therefore, take note of cards that offers a free credit checking service. This would help you know your credit score and keep you informed of any changes.
Beyond that, some card issuers have services like text alerts and apps that are designed to help you stay on top of your spending and payments. If you’re serious about improving your credit, don’t ignore these features. Going over your credit limit or missing payments can be costly in terms of fees, but they can also hurt your credit score. So getting some extra help staying on top of things can be a real benefit.
6. Don’t ignore cashback or rewards
Just because you need a card with which to rebuild your credit doesn’t mean you need to miss out on the perks that credit cards can offer. While they are unlikely to give the biggest rewards on the market, there are cards for those with bad credit histories that have cashback offers, reward points programmes or no fees for foreign transactions.
Treat these like the extra bonuses that they are though. Don’t choose a card that provides store rewards if another card will give you a few months of 0% interest and will save you a lot of interest. We get it, saving on interest may not be as fun as earning rewards, but when you’re trying to get your credit and finances in order, being practical can really pay.
And, of course, don’t use rewards or cashback as a reason to spend. Spend responsibly, pay down your balances and let the rewards take care of themselves. Besides, if you focus first on building or repairing your credit, you may soon stand the chance at qualifying for cards that offer much better rewards!
7. Be diligent
Your credit score is not going to improve overnight, but try to keep in mind that it will get better if you follow responsible financial habits going forwards.
After about 12–18 months of paying your bill on time and keeping within your credit limit, you should see an improvement in your score. This may mean that you then become eligible to apply for another credit card that offers better benefits.
And don’t get discouraged. This process can take time, and if you’re patient with it, and do take on better financial habits, those habits can serve you for the rest of your life.
How to build credit with credit cards
Let’s make no mistake, used irresponsibly, credit cards are great way to mangle your credit score and put yourself in a financial hole. But there are many benefits that come with having and using a credit card. One of them is that a credit card can actually help you improve your credit score.
That may seem surprising at first, but it’s true. Credit rating agencies look over your credit history to determine your credit score and when they see missed payments, defaults and exceeded credit limits, they give you a lower score. But the opposite is true as well. When they see increasingly good credit behaviour, like consistently making payments on time, paying your balance in full and staying well within your credit limit, those same rating agencies will start to raise your credit score.
Here are a few pointers to help this process along:
- Keep your balance low – Yes, you have a new credit card, but don’t be tempted to go on an all-out spending spree. Use your card to demonstrate that you are borrowing responsibly: make sure not to exceed your credit limit and do keep your balance low. One thing that rating agencies look at is how much of your available credit you use. If you’re consistently using 95% of your possible credit, they don’t see that as a good sign.
- Make your monthly payments – Try to pay at least the minimum payment each month. If possible, pay your balance in full, because anything left on the card will incur interest. But whether you’re paying in full or paying the minimum, do make your payment on time.
- Be patient – We’re all dedicated to something at the start (just ask anyone who’s ever made a New Year’s resolution!), but don’t be tempted to slip up and miss a payment or overspend a few months down the line. The more consistent you are with your borrowing behaviour, the more likely your credit score is to improve.
These steps may seem simple, but following them diligently can be surprisingly helpful when trying to improve your credit.
Is a credit-builder card right for you?
This is a question that you’ll for sure have to answer for yourself. It’s not fun to have credit issues, but by being honest with yourself, you give yourself the best chance of improving your situation.
With that in mind, being on a low income, being a student, having previously had an IVA (individual voluntary arrangement), a CCJ (county court judgement) or having been previously declared bankrupt could all affect your eligibility when applying for a credit card. Some card providers are also wary of other factors such as not having a permanent UK address or being self-employed. If these are true of you, or if you simply have been unable to get accepted for standard credit cards, then a credit card designed for those with bad credit may be the right choice.
Credit-builder cards are designed for those with bad credit histories and will often consider your application even if you fall into one of the above categories. If you have been declared bankrupt, though, you often need to wait for a certain period of time before applying for a credit card.
Of course it goes beyond simply whether you can get accepted for a credit card. You also need to assess whether you can responsibly manage a credit card. If you can answer yes to both of the following, a credit card may be a good option for you.
- Will you always pay on time? – Falling behind on payments can have a huge impact not only on your budget (late payment fees are typically £12) but also on your credit score. Once you apply for a credit card, you will need to know that you can make the required payment by the card’s due date.
- Will you not carry a balance? – You can easily get in financial distress if you don’t pay your balance in full and are therefore charged interest. This is especially true on credit-builder cards, since they typically have very high interest rates. It is best to be conscious of how much you are putting on your credit card and how much you can realistically pay off each month.
If you have a poor credit history, a credit card could be a useful tool to help you improve it. If you can answer ‘yes’ to the two questions above and are confident that you can display good borrowing behaviour, then a credit card could provide a launch pad to improve your credit score.
Remember when selecting a card to consider how much you can realistically pay off each month, what interest will be charged on any outstanding balances, any support services the card provider offers, any promotional periods, any chance to increase your credit limit or reduce your APR and any perks such as cashback or reward points. You may not achieve the best of all of these things in one card, but there are several options out there — it’s just a case of selecting which one will best meet your needs.
The content provided in these FAQs does not take into account the circumstances of any specific individual, and does not constitute personal advice or a personal recommendation for any individual; neither should it be relied upon by any individual when making any decisions. If you require any personal advice or personal recommendation, please speak to an appropriate qualified adviser.
