Credit cards for bad credit

Credit cards for bad credit
Choosing a credit card for bad credit

If you’ve a poor credit history, using a credit card to show you can repay on time each month can help rebuild your creditworthiness. Our guide has full info on how to best manage a credit card, plus our Credit Card Eligibility Calculator will show your chances of acceptance before applying, reducing the risk of a failed application.

Not got much credit history? If your credit history is non-existent rather than damaged, see our how to build your credit history and credit builder cards guide.

What causes someone to have a bad credit record?

Every adult possesses a credit history, documenting their past management of credit such as loans, store cards, or credit cards. This history serves as a gauge for potential lenders to assess your creditworthiness when you apply for financial assistance.

If you’ve encountered slip-ups in the past, like late payments, missed payments, or even instances of bankruptcy, defaults, or CCJs, lenders might view you as a higher risk. Consequently, they may decline your application for credit.

Fortunately, there are specialized credit cards designed to cater to individuals with less-than-perfect credit histories. Acquiring one of these cards, even amidst previous financial challenges, could provide a crucial financial opportunity. When used responsibly, these cards can play a pivotal role in rebuilding your creditworthiness, demonstrating your capability to repay debts promptly and reliably.

For comprehensive insights into the various types of credit cards available, explore our Credit Cards section, including options like Balance Transfer Credit Cards, which can be beneficial if you’re currently managing existing debt with interest charges.

How to repair your credit report using a credit card

Credit cards come with advantages and disadvantages, yet adhering to these guidelines can enhance your credit history. Utilize free tools to monitor progress, although it requires patience since noticeable improvements may take several months – persistence is key to eventual success.

1. Use your credit card for a small amount of everyday spending each month and NEVER withdraw cash

Instead of relying on cash or a debit card for your planned expenditures, consider using a credit card instead. It’s advisable to keep this usage below 30% of your credit limit, demonstrating that you’re not overly dependent on borrowed funds.

By using a credit card for purchases, your checking account balance will appear higher. However, keep in mind that you’ll need those funds to settle your credit card balance at the end of the billing cycle. To manage this effectively, consider transferring the equivalent amount from your checking account to a readily accessible savings account. This way, you can easily transfer it back to cover your credit card bill before it’s due.

If this approach seems daunting, start by making smaller transactions, perhaps around £50, on your credit card each month, and ensure you pay off the full amount when your statement arrives.

Avoid using your credit card at ATMs for cash withdrawals. This method is costly due to withdrawal fees and high interest rates that accrue immediately. Furthermore, frequent cash withdrawals can signal financial stress to potential lenders, potentially affecting your credit score negatively.

2. Repay IN FULL each month

Many credit cards waive interest charges on purchases if you settle the balance completely and punctually by the statement’s due date, making it the optimal method whenever feasible. However, it’s important to remember this exemption doesn’t extend to cash advances, where interest typically accrues immediately. This underscores why it’s advisable to refrain from using credit cards for cash withdrawals.

3. If you can’t repay in full, always repay AT LEAST the minimum repayment on time

If you are unable to settle your balance completely, you cannot avoid accruing interest, which will be calculated on your entire outstanding amount, including any portion you have already paid off.

It is crucial to meet the minimum repayment requirement each month, on or before your statement due date. Failing to do so may result in a late fee of approximately £10 and a negative mark on your credit report for missed payments, which could adversely affect your ability to obtain credit in the future.

To ensure you make timely payments, consider setting up a monthly direct debit to automatically cover at least the minimum payment due, or ideally, pay off a higher amount or the full balance whenever possible. If you anticipate difficulty in making payments, promptly contact your provider to discuss alternative repayment arrangements.

How to apply for a credit card for bad credit

No single credit card stands out as the ultimate choice for rebuilding credit. Any credit card can effectively improve your credit score if managed responsibly, especially when paid off completely every month without incurring fees.

If you already have a credit card, use that instead of getting another

Avoid triggering another credit check by following the steps outlined above to handle your current credit card, which should yield similar benefits as obtaining a new card.

If you’ve maxed out your limit and can no longer make additional purchases, always make sure to meet the minimum repayment and strive to settle as much of the balance as possible whenever feasible.

Consult our Comprehensive Persistent Debt Assistance guide for detailed assistance, including strategies to transfer existing debt to 0% interest rates for faster repayment and resources for accessing free personalized debt counseling.

If you need to apply for a new card, use our Credit Card Eligibility Calculator to compare cards in your personal best-buy table

Determining which credit card to apply for hinges on your acceptance by the issuer. We’ve outlined steps below to identify your ideal card, along with guidance if you encounter difficulties securing approval. Prior to beginning, it’s crucial to review your credit reports thoroughly for any inaccuracies that could unfairly lower your credit score (potentially affecting your eligibility for certain cards).

Verify your reports at no cost for comprehensive assistance.

Typically, submitting an application is the sole method to ascertain your eligibility for a credit card. However, each application triggers a ‘hard search’ on your credit report, and multiple searches within a brief period can impact your future credit prospects.

To assist you, our complimentary tool employs a ‘soft search’ to assess your likelihood of approval before you apply. Importantly, this soft search does not influence your future credit eligibility. Give it a try, or continue reading for a concise guide and our expert tips to select the ideal card for you.

Which credit card should I go for and how do I apply?

a) Provide your information to assess your approval odds for over 30 cards

Always ensure accuracy and thoroughness in your responses, as lenders cross-reference your details with information on your credit report. Any discrepancies could potentially delay or result in the rejection of your application, so it’s crucial to review your information carefully. Double-check, then check once more!

b) Seek out the card offering the greatest likelihood of approval

Your safest choice typically lies with the card that boasts the highest approval rating, minimizing the chances of application denial. Look for these indicators next to the listed cards in your search results…

c) If you qualify for multiple cards, consider these additional factors:

If you have existing high-cost debts, seek cards offering a brief 0% introductory period, which can help reduce expenses on these debts.

Explore various categories in the eligibility calculator as you might be eligible for other cards, some of which offer rewards or a more extended 0% introductory period. Refer to our comprehensive guide on Different Types of Credit Cards Explained for further assistance.

d) If you identify a suitable card, hit ‘apply’ to be taken to the card provider’s site to complete an application. The card provider may ask you to enter your details again, but this time it’s part of its official application, so will appear on your credit report. Therefore always double check the information you’ve entered is correct, before submitting.

You’ll usually receive an automated decision within a few minutes, though some applications may need longer to be reviewed. If you’re accepted you’ll receive the card in the post, often in a few days. If you find you’ve been declined, we’ve full help below.

You’ll see your eligibility chances for most of our top-pick cards

Our tool for assessing eligibility provides insights into your approval odds for various cards, including our top recommendations listed below. We have categorized these cards based on their benefits and representative APR. Some of these options also offer a period with 0% interest on spending. However, unless you have a specific borrowing need (and if so, ensure responsible card usage — complete details are outlined in the 0% spending section), it’s advisable to use these cards for modest expenditures and pay off the balance in full each month. This practice helps in establishing a positive credit history.

Nevertheless, using any credit card responsibly contributes equally to rebuilding your creditworthiness, so consider this list as a guideline rather than definitive advice.

What can I do if my credit card application has been declined?

If your credit card applications are consistently denied or you have a history of rejections, it’s probable that your credit score isn’t strong enough to qualify you for any card. However, applying for numerous cards and facing multiple declines within a brief timeframe could significantly damage your credit score for an extended period. Therefore, to protect your creditworthiness, you now have two viable choices:

• Wait until your bad credit history is less recent. Then try again (see below for how to track changes to your credit rating) and/or…
• Try the ‘credit-builder’ product below. It’s hard to quantify how much of a positive effect using this will have in comparison to waiting a year before applying for credit. However, this option is fee-free (if you open a free account at the end, if not it’s £30) and essentially gets you into a good savings habit, so could be worth a try.

Loqbox*

Build your savings pot and your credit history – if you can commit to saving between £20-£200/mth for one year. Cost: Free or £30

1. You choose a fixed amount (£20-£200) you can save each month for a year, which is then charged to your debit card each month. 2. Loqbox gives you a 0% loan for the total (so £240-£2,400) – you won’t be able to access this loan money, but it appears on your credit report as a loan (don’t worry, there’s no credit check). 3. Your monthly ‘savings’ are then used to ‘repay’ the loan over the year, with payments reported to all three credit reference agencies. 4. At the end of the 12 months, you have a fully repaid loan on your credit report (and hopefully an improved score) plus you’ll get all your money back. There’s a £30 fee to have it paid into your existing bank account, or it’s free if you open a new account with one of the banks Loqbox partners with, such as TSB, Monese or Kroo. When coming to withdraw your funds, you’ll see next to each provider whether it’ll require a hard or soft credit search – Loqbox says most won’t require a hard search (of its three partner banks, only TSB does), though be wary if you choose one that does. Important: Never miss a monthly payment, or pay late. Doing this would leave you in a worse position than not getting Loqbox and doing nothing. If you can’t afford to continue saving, you can cancel your agreement at any time and get your money back – typically in five working days.

How do I check my credit score?

The best way to keep track of changes to your credit history is to regularly check your credit reports.

There are three credit reference agencies which hold your credit reports – Equifax, Experian and TransUnion (formerly Callcredit). It’s best to check all three reports, because lenders may check one, two or all three when you apply for credit.

All three give you free access to your credit report and score.

• Experian: Use Credit Club
• Equifax: Use Clearscore*
• TransUnion: Use Credit Karma

While your credit score provides a useful snapshot of your financial health, it doesn’t encompass all factors that lenders consider during credit applications, such as your complete application details.

It’s important to monitor your credit score regularly to stay informed, but achieving an “excellent” rating doesn’t guarantee automatic approval for all types of credit—it’s not that straightforward.

For comprehensive assistance, refer to our guide on How to check your credit report for free and explore our Credit Score guide for additional strategies to enhance your overall creditworthiness.

Bad credit credit cards FAQs

Q – What are the easiest cards to get?

A – Each credit card issuer establishes its unique set of criteria to assess applicants, focusing primarily on income, credit history (which encompasses past credit management like loans or mobile phone contracts), and the intent to use the card for cash withdrawals.

As a result, there isn’t a definitive list of the “easiest cards to get” since approval varies based on individual circumstances. However, the cards featured in this guide cater specifically to individuals with lower credit scores, often accommodating applicants with CCJs, defaults, or prior bankruptcies who might not qualify for other cards.

We provide comprehensive guidance on identifying the best credit card for rebuilding credit, including access to our credit card eligibility calculator. This tool predicts your likelihood of approval for numerous cards before you submit an application.

Q – Can you get a card with very poor credit?

A – The eligibility for each credit card varies based on its specific criteria, but the cards discussed in this guide cater specifically to individuals with lower credit scores. Consequently, they are more likely to approve applicants who have experienced CCJs, defaults, or past bankruptcies, which might lead to rejection by other card issuers.

For detailed guidance on selecting the most suitable credit card to rebuild your credit, refer to our comprehensive advice above. Utilize our credit card eligibility calculator, which assesses your likelihood of approval for numerous cards before you proceed with your application.

Q – What causes bad credit?

A – As mentioned earlier, every adult possesses a credit history, a detailed account of your credit management history (like loans, store cards, or credit cards) over time.

This record is crucial as other creditors refer to it to assess your creditworthiness when you apply for new credit. If you’ve had missteps in the past, such as late payments, missed payments, or even instances of bankruptcy, defaults, or CCJs, you might be seen as too risky, which could lead to rejection of your credit applications.

It’s also wise to regularly review your credit reports for inaccuracies that could unfairly lower your credit score (and potentially affect your eligibility for certain cards). For comprehensive guidance, explore 28 strategies to boost your credit rating.

Q – I’ve been accepted but the interest rate is higher than the one advertised. Why is this?

A – Unfortunately, this is a common pitfall to be wary of. Credit card companies can offer a higher interest rate than the one promoted for the card, as only 51% of applicants who are approved need to receive this advertised APR. Therefore, even if a credit card advertises a representative APR of 34.9%, it does not guarantee that this will be the interest rate you receive. Nevertheless, by using these cards responsibly, you can avoid paying interest altogether, making the actual interest rate less critical.