What exactly are credit building cards?
Think of them as entry level credit cards. They might suit you if you’ve never had a credit card before or if your credit history isn’t so great.
Contrary to popular belief, there isn’t a universal rap sheet of people with poor credit scores. Your credit history is made up of lots of different elements – such as whether you have a bank account and if you do, how you manage it. It’s also based on things like whether you have any direct debits and if you’re on the electoral register (so lenders can check you live where you say you do).
Think about what joint loans you have (such as a mortgage) as well as any shared bank accounts you have – because the credit history of the person you share those with will also affect yours.
Oddly if you’ve never used credit and never borrowed then you might find you’re refused a credit card. If this is the case, the refusal is usually down to the fact that lenders have no idea whether you’d be a good candidate for them to risk lending money to (you’re basically off the grid).
So you could find yourself the focus of a poor credit history for various different reasons. If that’s the case then credit builder cards offer a way to change that.