Best Credit Cards for Bad Credit

Your credit score can significantly impact your financial future. It ultimately decides if you can get a mortgage, a loan, a credit card, or other credit products, as companies run a credit report to check if you're a responsible borrower.

If you have poor credit or no credit, it can be challenging to build your credit report to make yourself a more promising candidate for credit products.

Big credit companies may stop you from getting a credit card with them, but that's where credit builder cards come in to save the day. Don't let a bad credit history get in the way of increasing your credit rating and making your credit file more desirable for future financial applications.

In this article, you'll learn all about credit scores, how to build your credit report and help you find the right credit builder credit card to achieve this.

The Best Credit Cards for Bad Credit Ratings

We've compiled a list of the five best cards for bad credit. Let's dive right in.

1. Vanquis Bank Chrome Credit Card

Although you should aim to clear your balance in full, the Chrome Credit Card offers a sustainable interest rate for a credit builder card.

This card has no annual fees, and you get up to 56 days interest-free on purchase transactions when you've paid the whole balance on two or more consecutive current statements.

Vanquis Bank Chrome Credit Card

Credit Limit

Minimum £500

Representative % APR (variable)

29.5% APR

• Rates of 26.5% APR (variable) or 29.5% APR (variable) depending on individual circumstances.
• Credit limit £500 to £1,500 (subject to status).
• £10 minimum repayment.

Check my eligibility See more details

Representative Example – If you spend £1,200 at a purchase interest rate of 29.5% p.a. (variable) your representative APR will be 29.5% APR (variable). Your APR and credit limit may vary depending on your circumstances.

2. Tesco Bank Foundation Credit Card

With Tesco's Foundation Credit Card, you can earn Clubcard points from almost anywhere (including Tesco) whilst working on your credit score. You'll be able to keep track of your credit score with monthly updates from the Tesco Bank CreditView that TransUnion provides.

Tesco Foundation Credit Card

Credit Limit

Minimum £250

Representative % APR (variable)

29.9% APR

• Collect Clubcard points almost every time you shop.
• Credit limit £250 to £1,500.
• Access to Tesco Bank CreditView, provided by TransUnion, for 3 years from account opening.

Check my eligibility See more details

Representative Example – If you spend £1,200 at a purchase interest rate of 29.9% p.a. (variable) your representative APR will be 29.9% APR (variable). Your APR and credit limit may vary depending on your circumstances.

3. Capital One Classic Credit Card

This credit builder card is great if you already have a credit score you want to increase. The Capital One Classic card overlooks some defaults from your credit history. However, your application will be rejected if you’ve declared bankruptcy within the last 12 months or have no credit record.

Capital One Classic Credit Card

Credit Limit

Minimum £200

Representative % APR (variable)

34.9% APR

• For people with bad credit or building credit.
• Credit limit £200 to £1,500.
• Minimum repayment £5.

Check my eligibility See more details

Representative Example – If you spend £1,200 at a purchase interest rate of 34.94% p.a. (variable) your representative APR will be 34.9% APR (variable). Your APR and credit limit may vary depending on your circumstances.

4. Barclaycard Forward Card

The Forward Card is a smart choice if you're looking to build a good credit score, as it comes with a personal credit limit based on what you can afford. You can easily manage your account with handy alerts via text or email.

Barclaycard Forward Card

Credit Limit

Minimum £50

Representative % APR (variable)

33.9% APR

• 0% interest on purchases for 3 months (from the date you open your account).
• Credit limit £50 to £1,200.
• Minimum repayment £5.

Check my eligibility See more details

Representative Example – If you spend £1,200 at a purchase interest rate of 33.9% p.a. (variable) your representative APR will be 33.9% APR (variable). Your APR and credit limit may vary depending on your circumstances.

5. Post Office Classic Credit Card

The Post Office Classic Credit Card is globally accepted anywhere that accepts Mastercard®. You could get a potentially low APR rate, which is ideal for people with a poor credit rating or no credit record. You can also make balance transfers with this card.

Post Office Money Classic Credit Card

Credit Limit

Minimum £200

Representative % APR (variable)

34.9% APR

• 0% on purchases for up to 12 months and 0% on balance transfers for up to 12 months (2.9% transfer fee). Subject to eligibility.
• Credit limit £200 to £8,000.
• Minimum repayment 3% or £5, whichever is greater.

Check my eligibility See more details

Representative Example – If you spend £1,200 at a purchase interest rate of 34.94% p.a. (variable) your representative APR will be 34.9% APR (variable). Your APR and credit limit may vary depending on your circumstances.

What is a Credit Rating?

Your credit scoring depends on your credit record; it lets banks and lenders know your creditworthiness.

A high credit score indicates you're a low risk to lend money, and a poor credit score makes you a higher risk.

You may be wondering what decides your credit score, and various factors help credit reference agencies determine your credit score. Your credit score is calculated with these factors in mind:

• Payment history: checks if you are a responsible borrower who can repay the credit in time or if you have missed repayments, declared bankruptcy or debt settlements.
• Length of credit history: lenders want to see how long you've been using credit and if you have any long-term debts.
• Credit utilisation: allows lenders to see how much you've used of your total available credit and how much you owe on different accounts. Credit utilisation can also help determine future credit limits on future credit accounts.
• Types of credit: they check to see if you have a mix of credit types, such as mortgages, store accounts, and credit cards.
• New credit inquiries: any credit you've recently applied for is shown on your credit report.

Although all of these factor into the result of your credit score, the most important of the five are credit utilisation and payment history, as this is the most important information for deciding your credibility.

So, now that you know the factors to calculate your credit score, what constitutes a good or bad credit score?

How Your Credit Report is Scored

Each credit reference agency has its own approach to calculating your credit score. However, a credit score is usually between 0 and 999. The main credit reference agencies here in the UK are Experian, TransUnion, and Equifax.

It's important to note that each credit reference agency has a different guideline on a poor, good or excellent credit score.

Experian rates credit scores as follows:

• Excellent: 961 to 99.
• Good: 881 to 960.
• Fair: 721 to 889.
• Poor: 561 to 720.
• Very poor: 0 to 560.

TransUnion rates credit scores as follows:

• Excellent: 781 to 850.
• Fair: 661 to 720.
• Poor: 601 to 660.
• Very poor: 300 to 600.

Equifax rates credit scores as follows:

• Excellent: 800 to 850.
• Very good: 740 to 799.
• Good: 670 to 739.
• Fair: 580 to 669.
• Poor: 300 to 579.

So, where in one agency your credit score is considered poor, it could be fair in another. Don't worry if your credit score is more on the lower end of these credit ratings. Your score can change regularly, and you can increase your credit score with a credit builder credit card.

The Different Types of Credit Cards

A credit builder card is one of seven credit card types.

Before looking for the right credit builder card, it's important to understand credit cards.

The different types of credit cards are:

• Balance transfer cards: if you've already got a credit card, you can reduce the interest paid by moving your existing debt to a balance transfer card. These cards usually have a low interest or 0% rate as an introductory offer for a set period. You typically need a high credit score for this type of card.
• Purchase cards: allow you to make purchases at a 0% interest rate for a set period. These cards are ideal for spreading the cost of a big purchase. Some card providers allow you to stay at a 0% interest fee if you pay back the amount on time.
• Balance transfer and purchase cards: this card will give you the best of both worlds of balance and transfer cards. This option may suit you if your credit rating is good and you can pay off your cards quickly.
• Reward cards: you can get rewards like cashback, shop discounts, or travel miles with this card. It usually comes with annual fees, and APR for a reward card can be as high as 108.9% but as low as 10.9%.
• Money transfer credit cards: this card allows you to transfer money from the card to your debit card. People use this card to transfer balances to pay overdrafts. A good credit rating is needed for a money transfer credit card.
• Travel credit cards: if you're travelling overseas, it can be risky to take cash with you, and your usual credit card may have hefty fees. Travel currency cards reduce the cost of using a card abroad.
• Credit builder cards: designed for people who are a high risk to lenders. This card type is ideal for building your credit score and proving reliable.

Taking out a credit card is a serious commitment, and before you start searching for yours, knowing what you're getting into with credit cards is essential.

Advantages:

✔️ Spreads the cost of purchases: if you need something, you can use a credit card to help you pay for it before payday, and you can spread the cost of your purchase, making it more affordable.

✔️ Safer than carrying cash: if your money is stolen, it's unlikely to be found or returned. However, if you lose your credit card, you can cancel it. If your credit card is stolen and used, you can claim the amount to be refunded by the card provider.

✔️ Building a good credit profile: many people get a credit card to help increase their credit profile so they can apply for a mortgage.

✔️ Spending abroad: you don't need to carry cash while travelling. A card can help you pay safely with little to no fees.

Disadvantages:

❌️ Long-term debt: by using credit cards, you can accrue debt. If you don't pay your cards off, you can get into severe debt that you may struggle to settle. So, paying back more than the minimum amount on your credit accounts is always a good idea.

❌️ Damaging to your credit score: although credit cards can help build your credit score, you can damage your credit score if you miss payments or pay late.

❌️ High-interest rates: you need to be careful of the interest rates on your cards. Many cards offer interest-free periods, but you must have a watchful eye for when these periods end.

Now that you know about credit cards, let's further explore credit builder cards to increase your credit rating.

What are Credit Cards for Bad Credit Scores

Credit builder cards help you build your credit score over time by spending on credit.

The idea is to use the card to make purchases and pay back the monthly amount you've used.

A credit builder card works like a regular credit; however, they come with a lower credit limit and high-interest rates. They're great if you've got a poor credit score or no credit score at all.

If you're high-risk with a low score, you'll find that if any credit card companies offer you their products, they'll come with much higher representative annual percentage rates (APRs).

Advantages:

✔️ Improve your credit score: by borrowing small amounts and paying them back in full and on time every month, you can increase your credit score within six months.

✔️ Purchase protection: card purchases over £100 are covered under the Consumer Credit Act.

✔️ More likely to be accepted: credit builder cards have lower application criteria, so you're more likely to be approved.

Disadvantages:

❌️ Higher APRs: interest rates are higher than standard credit cards, usually from 27% to 60%.

❌️ Lower credit limit: as you build trust with lenders, your credit limit will start low.

❌️ Increased debt: if you already have debt accounts and have issues repaying them, adding another to the pile may not be a good idea.

Best Credit Cards for Bad Credit Scores

Factors we considered:

• APR rates: although most credit builder cards have a high APR (up to 60%), we looked at ones that were on the lower end.
• Features: some cards have benefits like earning rewards, and some make it easier to spend safely abroad.
• Customer service: if any issues occur, the credit card provider must have strong customer service that you can easily reach.
• Eligibility: it's not guaranteed you'll be accepted for every credit builder card you apply for, but we've found great ones for people with a poor credit record.
• Credit limits: credit builder cards usually offer a low limit, but limits will differ between card providers.

Final Thoughts on Increasing Bad Credit

Credit cards for bad credit are the best way to improve your credit rating.

However, you can do more to help increase your credit score faster.

You can:

• Close unused credit accounts: if you're not using any credit accounts, it's best to close them, as this shows potential lenders you won’t overstretch yourself when borrowing.
• Repay on time: repaying your bills and borrowed credit on time shows you're a responsible borrower.
• Register on the electoral roll: registering on the electoral roll with your local councils helps lenders use this as proof of your address.
• Keep an eye on your credit file: check for any mistakes; if you spot any errors, let the credit reference agency know so they can make amendments.
• Limit the number of credit applications: when looking to lend credit, companies run soft and hard checks on your credit history, leaving marks on your report.
• Only use some of your credit limits: not fully utilising your credit limit shows your finances aren't stretched.

Now that you know all you need to about increasing bad credit, you'll soon be able to say goodbye to your poor credit history. With one of our chosen cards for bad credit, you can start increasing your low credit score.

At Compare Banks, we empower you to take control of your finances by allowing you to compare all the banks in the UK to make sure you find the right financial product that suits your needs.

Related Guides:

• How To Pay Off Credit Card Debt
• Secured Loans For Bad Credit: What You Need To Know
• How To Get Your First Credit Card: Tips & Advice
• How to Borrow Money with Bad Credit
• Pros & Cons of Getting a Credit Card?