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Compare credit cards for bad credit

If you have bad credit, see how specialist credit building cards can help.

If you have bad credit, see how specialist credit building cards can help.

If you have bad credit, see how specialist credit building cards can help.

If you have bad credit, see how specialist credit building cards can help.

If you have bad credit, see how specialist credit building cards can help.

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Coronavirus (COVID-19) update

Unfortunately, due to the outbreak of coronavirus (COVID-19), some lenders have decided to temporarily stop offering credit cards through Compare the Market. As a result, we'll only be able to show you credit cards from lenders still available, meaning you may see a reduced number of cards on our panel.

Credit building cards

If you have a bad credit rating and you’re worried about your low credit score, then a credit building card could help you out. Learn how, if used in the right way, this type of card can work for you while giving you peace of mind.

What is a credit building credit card?

A credit building credit card, sometimes known as a bad-credit card, is a type of credit card available to people who might not get accepted for standard cards. These cards can  help you get credit and, as long as you meet the repayments each month, help to prove that you can manage money in a responsible way. If your credit score is low, then a credit building card can be a good way of building it up. 

How do credit building cards work?

As with all credit cards, a credit building card will have a maximum spend limit. However, the limit on credit cards for bad credit is typically lower than most other credit cards – from around £100 to £1,200.  
 
It’s also very important you understand the APR (annual percentage rate). A credit card’s APR shows you how much interest you’d be charged, over the course of a year, for borrowing on credit if you don’t pay the outstanding balance back in full each month.   
 
Credit building cards often come with a higher rate of interest, so it’ll cost you more money than other types of credit card (in terms of interest) if you don’t pay off your balance each month. This reflects the greater risk the provider is taking on by lending money to someone with a poor credit history. As with any credit card, it’s  really important to pay off what you owe on the card in full, each month. Depending on the terms and conditions set out in your card agreement, your limit could be increased as you prove that you can spend more responsibly. But this depends on many factors – including the terms you agreed to when you applied for the credit card.  

What are the pros and cons of a credit building card? 

As they tend to have a low spending limit, a credit building card  can be a good way of reversing your bad credit history. The low spending limit could prevent you from racking up thousands of pounds' worth of debt over a short period of time.  
 
You might view a low spending limit as a drawback. But if you make all your repayments on time and don’t exceed your credit limit, your credit rating should improve over time. 
 
Don’t forget, paying with any kind of credit card, including a credit building card, gives you extra consumer protection for anything you buy that costs between £100 and £30,000. See more on credit card payment protection.
 
One of the disadvantages of credit building cards is that they tend to carry a higher rate of interest – between around 29% to 60%. That can make them expensive to use if you don’t pay the balance back in full every month. And don’t forget there’s always a risk involved in taking out any kind of credit.  

Who are credit building cards good for? 

Credit building cards are aimed at people who want to improve their credit score, or for people who aren’t eligible for many other cards. People they’re aimed at include those with: 

  • past debt problems 
  • County Court Judgements against them 
  • a history of bankruptcy 
  • a record of unpaid bills 
  • no history of borrowing 
  • no entry on the electoral register 

What else should I look for when choosing a credit building card?  

When comparing credit building card providers, you might want to ask yourself: 

  • Does the credit lender run a ‘soft check’ before I apply?  A soft check is when a person or company checks your credit report as a background check. Each time you apply for credit it’ll show up in your credit history. A soft check won't affect your credit in any way, but it will help you know if you’re likely to be accepted for a card, without fully applying. If the lender runs a hard check, this will show up on your credit record. To minimise potential problems, you could see what credit cards you’re likely to be accepted for with our credit card eligibility checker
  • Can I manage my credit card account online or through an app?  Some providers will notify you via a text or other alert when a payment needs to be made, or a new statement can be seen – both of which can help you to keep on top of your finances. 
  • Can I transfer an outstanding balance? Some credit building cards will allow you to do this. 
  • What fees and charges might I have to pay? Check what the fees may be for late payments, for going over your credit limit or using your card abroad, for example. 
  • Does the card offer any benefits? Some cards – the Barclaycard Forward Credit Card, for example – may promise a reduction in interest rates if you make all your payments on time and stay inside your credit limit in the first year. But these cards may have a higher rate of interest to start with. Other cards, for example the Tesco Bank Foundation Clubcard Credit Card, may give you points. 

Make sure you check any eligibility requirements, too. Some credit building cards rule out potential borrowers on specific grounds. For example, if you’ve missed more than three payments on another credit product in the last six months. 

Frequently asked questions

What APR will I get?

It depends. When credit card providers show a representative APR, the rules say this rate must be offered to at least 51% of people accepted for the card.   
 
The remaining 49% of successful applicants are more likely to be offered a higher rate. If you’re one of these people, the rate you’re offered will be based on how big a risk the credit card company consider you to be. 
 
Using an eligibility checker that doesn’t leave a record on your credit file can be a good way of seeing the rate you might be offered. Why not try AutoSergei's™ credit card eligibility checker now? It takes under an average of 2 minutes**. 
 
**On average it can take less than 2 minutes to complete a credit card eligibility check through Compare the Market based on data in February 2020. 

What’s a credit score and why is it so important?

A  credit score  is a tool typically used by a lender to work out whether you qualify for a particular credit card, loan or mortgage. A  higher score means you're more likely to be accepted for credit. A lender will also consider your credit report (or history), detailing all the credit you’ve had, or have applied for in the past. Read about some of the steps you can take to  improve your credit rating. 

Why might I be refused credit?

There are many reasons you could be refused credit, or be seen as a bad credit risk. It could be that  you’ve no history of credit, have never borrowed or even had an overdraft. In that situation, a lender will have a limited idea of whether or not you’d be a good risk, and whether you’d be able to pay back what you owe. Another factor could be that your employment status isn’t strong enough to get the credit card you’d like. 
 
Credit checks also highlight any problems you may have had in the past with paying back debt. To a potential lender, this might serve as a red flag and they may refuse to accept your application. Checks will also show whether you have any County Court Judgements (CCJs) against you, and whether you’ve ever been declared bankrupt, or if you’ve committed fraud. 
 
If you’ve been a victim of fraud in the past, this could also make getting credit difficult. 

Where can I check my credit report?

There are  three main credit reference agencies in the UK: Experian, Equifax and TransUnion (formerly Callcredit). These organisations  compile information about how you manage your money (assuming you’re over 18). However, it’s worth noting that  not all of them will hold exactly the same information about you. 
 
If you’ve been refused credit, you can ask why and find out which credit reference agency (CRA) was used.  You can also  check your credit report  to make sure it’s correct. You might find there’s a genuine error on your report. A refusal could be down to something simple like your address being wrong. 
 
You can check your credit report for free. The three main agencies allow you to do this online at Experian, ClearScore (Equifax) or Credit Karma (TransUnion), or you can write to them and ask for your report. If you want additional services like continual credit monitoring, you may be asked to pay an additional fee. Check out our guide to free credit checks. 
 
Remember too, that Compare the Market’s AutoSergei credit card eligibility checker allows you to see the cards you're most likely to be accepted for, without affecting your credit score. 

What if I have no credit record?

Young people or people who have never borrowed before can find themselves in a catch 22 situation. As they haven’t borrowed before, they won’t have a credit record. Without a credit record, providers may be unwilling to lend to them.  
 
A credit card with a low limit can be a good way to start building credit. If you’re considering this option, make sure you’re on the electoral register.  
 
You can use our AutoSergei eligibility checker to see the cards you’re most likely to be accepted for, before you apply. This helps you avoid making multiple applications that could make you look desperate for credit. Ideally, you should pay back what you spend in full every month and make all payments on time. Over time, this can help you build a good credit record. 
 
A mobile phone contract with regular bills that you always pay off may count favourably towards your credit record. See more on how to build your credit score. 

Could using a credit card make my credit score worse?

Using a credit card could make your credit score worse, if you’re not careful. 

Late and missed repayments will damage your credit score. And just because you have a credit card limit, it doesn’t mean you should spend up to it. Credit ‘utilisation’ – how much of your credit limit you’ve used – is one of the factors that affects your credit score.  
 
If your credit utilisation rate is high, providers may worry that you’re facing financial difficulties. See more about what a credit utilisation rate is and why keeping it low is important.

Where can I compare credit building cards?

We’ve teamed up with  Runpath Regulated Services Limited  to show the key features of each of the credit-building cards you can compare with us, helping you to choose the card that’s right for you. Don’t forget, with AutoSergei, you can see which cards you’re likely to be accepted for, without affecting your credit record. 

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