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 Correct as of June 2023.
What are credit cards for bad credit?
Credit cards for bad credit are aimed at people with a poor borrowing history who want to improve their credit score.
Sometimes known as credit builder cards, credit cards for bad credit often have low borrowing limits and high interest rates. This reduces the risk to the lender.
If you have a bad credit history, this type of credit card could help you prove to lenders that you can manage money in a responsible way – that’s as long as you meet the monthly repayments.
A credit card for bad credit could also help you build your credit score over time. You could then qualify for better deals in future.
Why do I have bad credit?
There are two main reasons you might have bad credit:
Problems with debt
If you’ve struggled to pay back debts in the past, this might be reflected in your credit score. Lenders typically use your credit score to help decide whether to offer you financial products like credit cards, loans or mortgages.
Reasons you might be denied credit include:
- A record of unpaid bills
- Filing for bankruptcy in the past six years
- Having a recent County Court Judgment (CCJ) against you
- Entering into an Individual Voluntary Arrangement (IVA)
- Going over your credit limit
- Breaking your credit agreement
- Making too many credit applications in a short time.
Having no credit history
Even if you’re good at managing your money, not having a credit card or a history of borrowing can count against you.
If you’ve never borrowed before, a lender won’t know what kind of risk you pose, or if you can pay back what you owe.
A poor credit score could make getting lending approval more difficult, but it’s not impossible. There are steps you can take to improve your credit rating.
How can I get a credit card with bad credit?
If you’re thinking of applying for a bad-credit credit card, following these tips could give you a better chance of being accepted:
Use an eligibility calculator before you apply
Eligibility checkers can show you credit cards you’re likely to be accepted for, without affecting your credit score.
Only apply for credit cards you’re likely to be accepted for
Making an application and having it rejected can damage your credit score further.
If you’re rejected for a credit card, don’t immediately apply for another
A formal application for a credit card leaves a mark on your credit report, which could impact your score. If you’re repeatedly rejected for credit over a short period, this will lower your score further.
Instead, wait a few months then use our eligibility calculator to look for an alternative.Check my eligibility
What credit cards can I get with bad credit?
The easiest low credit score credit cards to get are credit builder credit cards – although not everyone will be accepted.
These are designed to help you improve your credit score and could help you get your finances back on track.
If you have bad credit, you’re unlikely to get a credit card with high borrowing limits and low interest rates. You may struggle to get cards with 0% APR or rewards.
Lenders tend to save their best deals for people with higher credit scores. You could increase your chances of being approved by applying for credit cards for low credit scores.
Credit cards for unemployed people
Getting a credit card if you’re unemployed and have bad credit isn’t impossible, but it can be difficult. Most credit cards, even credit cards for those with bad credit, demand a minimum income.
Your best bet is to compare credit cards and review the application requirements. Your unemployed status means you’re likely to pay higher fees, as providers seek to offset the risk.
What are the pros and cons of credit cards for bad credit?
As with any financial product, credit cards for bad credit have pros and cons:
- Improve your credit score – if you stay within your credit limit and make your payments on time, a bad-credit credit card could help repair your poor credit history.
- Limit your borrowing – the low credit limit means you won’t be able to rack up thousands of pounds’ worth of debt.
- Better chance of approval – providers of poor-credit credit cards are more likely to accept your application.
- High interest rates – credit cards for bad credit tend to have higher interest rates. That will make them expensive if you don’t pay off your balance each month.
- Low credit limits – you won’t be able to spend as much as you might on other cards. This is because the lender sees you as a high-risk borrower.
- Fewer incentives – bad-credit credit cards are less likely to offer 0% interest periods or other benefits.
What should I look for when choosing a bad-credit credit card?
When comparing credit cards for bad credit, ask yourself:
- Can I manage my credit card account online or through an app?
Some providers notify you when you need to make a payment or have a new statement. This can help you to keep on top of your finances.
- What fees and charges might I have to pay?
When taking out a credit card, check the fees for late payments, going over your credit limit or using your card abroad. You should also check for any annual fees. Not all providers charge an annual fee.
- What’s the APR of the card?
A credit card’s APR (annual percentage rate) shows you the total cost of borrowing over a year.
- What are the eligibility requirements?
Some credit cards for bad credit rule out borrowers on specific grounds. For example, if you’ve missed more than three payments on another credit product in the past six months.
- Does the card offer any benefits?
Some cards promise a lower interest rate if you make your payments on time and stay within your credit limit in the first year. But these cards may have a higher interest rate to start with. Other cards may give you points to spend in stores.
Where can I compare credit cards for bad credit?
We’ve teamed up with Experian Limited to show the key features of each bad-credit credit cards you can compare with us. This will help you choose the card that’s right for you.
Don’t forget you can see which cards you’re likely to be accepted for, without affecting your credit record.
To apply, you’ll usually need:
- Proof of address for the past three years
- Recent bank statements
- Your salary
- Your employer details.
Compare the Market Limited acts as a credit broker, not a lender. To apply, you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.
See if there's a deal that could suit your needs.Compare credit cards
Frequently asked questions
Will a credit card for bad credit help me if I’m in debt?
While bad-credit credit cards can help you spread the cost of purchases, never see them as a solution to debt. If you can’t pay off your balance, you risk getting into more financial difficulty as interest mounts up.
If you’re worried about debt, contact your lender. They may be able to change your payment plan or give you a payment holiday. You can also get free support from debt advice charities including StepChange and National Debtline.
What is considered a bad credit score?
Different credit reference agencies (CRAs) use different scales for scoring, which can be confusing. But it’s always the case that the lower your number, the worse your credit score.
Here’s what the three main CRAs in the UK consider a poor credit score:
- Experian: 720 or below (out of 999)*
- Equifax: 579 or below (out of 1,000)*
- TransUnion: 565 or below (out of 710)*.
Discover how to check your credit report for free.
*Correct as of August 2023
What’s the difference between bad credit and no credit?
‘No credit’ means you don’t have a credit history. This could be because you’re too young, have only just arrived in the country, or you simply haven’t borrowed before.
‘Bad credit’ refers to someone who has a credit history but may have had issues with debt, made late repayments, or broken the terms of their credit agreement.
Could using a credit card make my credit score worse?
Using a credit card could hurt your credit score if you don’t manage it properly. Missing payments, late payments and going over your credit limit can all damage your credit score.
Nor is it a good idea to spend up to your credit card limit. Credit ‘utilisation’ – in other words, how much of your overall 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 credit utilisation rates and why keeping yours low is important.