Best Credit Cards to Build Credit

Read on to find out more.

Updated: April 1, 2024
Matt Crabtree

Written By

Matt Crabtree

|
Rebecca Goodman

Edited By

Rebecca Goodman

 

There are many reasons why someone may not have a good credit rating, they might not have a history of using credit, for example, or they might have defaulted on a loan in the past.

However, there are lots of ways to improve a credit rating, and one of those is using a credit builder card.

In this article we talk about how credit builder cards work, who they might be suitable for, how to use them, and review some of the best on the market.

ServiceScoreRegister
1. Barclaycard Forward Card★★★★★Click Here
2. Tesco Bank Foundation Credit Card★★★★★Click Here
3. NatWest Credit Card★★★★★Click Here
4. Aqua Classic Credit Card★★★★★Click Here
5. Capital One Classic Credit Card★★★★Click Here
6. Vanquis Bank Classic Credit Card★★★★Click Here
7. TSB Advance Credit Card★★★★Click Here
8. Sainsbury's Bank Everyday Credit Card★★★★Click Here

Credit rating: what is it and how to check it?

Your credit rating measures how reliable you are as a borrower and how likely you are to repay your debts on time.

Lenders use your credit record to assess whether to approve your credit applications, such as a credit card, loan, or mortgage. They will also use your credit rating when calculating how much to lend to you, and at what interest rate.

​​Your credit rating is impacted by lots of different factors, including your previous credit applications, payment history, and current credit balances.

Maintaining a good credit rating is essential to access credit at the best rates.

​​How to check your credit rating

You can check your credit rating with one of the three leading UK credit reference agencies: Equifax, Experian, and TransUnion. It's free to check your credit score although each agency also has an upgraded package available, which gives you more detail about your score for a monthly fee.

Here is a simple how-to guide on checking your credit file:

  1. Visit one of the credit reference agency websites (Equifax, Experian, or TransUnion)
  2. Sign up for a free account and provide your details, such as your name, address, and date of birth
  3. Once you have signed up, you can access your credit report, which shows your credit history
  4. Review your credit report carefully, checking for any errors or inaccuracies that could negatively affect your credit record
  5. If you spot errors, contact the credit reference agency to request a correction

What if I have a bad credit score or none at all?

Understanding your financial situation is essential. It can help you to budget, manage your everyday finances, and it also shows you how likely you are to be approved for credit.

Your credit rating is usually expressed as a number within a range. Each credit reference agency has its own scoring system, so your credit score may differ slightly depending on which agency you check it with. This also means you won't have just one single credit score either.

Generally, the higher your rating, the more likely you will be approved for credit applications. A good rating is above 720 (out of 999) by Equifax and above 961 (out of 999) by Experian.

What does bad credit have an impact on?

Having bad credit can impact you in more ways than you think and it means getting approved for financial products can be challenging. If you get approved, you may also be subject to higher interest rates and less favourable terms.

If you have a poor credit score you may also be rejected when you apply for credit, especially market-leading products.

Some employers may also run credit checks as part of their hiring process, and having a bad credit score could impact your ability to get hired.

However, there are lots of ways to improve your credit score and it can change all the time. Although it won't happen overnight, the sooner you start changing the way you use credit, the sooner your score will increase.

How to boost your credit score

There are several ways to improve your credit score, including with the following tips:

Use credit responsibly

Using credit responsibly is a critical factor in improving your credit score. This means paying your bills on time, keeping your credit balances low, and only applying for credit when you really need it. Avoid taking out payday loans or other high-cost credit products too, as they can negatively affect your credit score and suggest that you struggle financially.

Stay on the electoral roll

Being on the electoral roll is important as it shows lenders that you are a stable resident and it can be used as proof of your address

Check your credit report regularly

Checking your credit report regularly will help you spot any errors or inaccuracies that could negatively affect your credit score

What is a credit limit?

A credit limit is the maximum amount of money that a lender is willing to lend to a borrower.

The lender determines the credit limit based on your credit history, income, and other factors affecting your ability to repay the debt.

Once a credit limit is established, you can use your credit card up to that limit. For example, if you have a credit limit of £5,000 on your credit card, you can spend up to £5,000 on purchases, cash advances, or balance transfers.

It's important to note that exceeding the credit limit can result in fees and penalties and negatively impact your score. Therefore, it's crucial to keep track of the credit limit and stay within the limit to avoid any adverse consequences.

What happens if you're declined a mainstream credit card?

If your application was not approved, it may because of one of the following reasons:

  • Past debt problems
  • If you have had an Individual Voluntary Arrangement (IVA) or been made bankrupt in the previous six years
  • County Court Judgements (CCJs) against your name
  • You are not on the electoral roll
  • You have unpaid pills, both in your name or in a joint account with someone else

If you have been declined when applying, a credit builder credit card may be an option and if used correctly it can help to improve your credit score.

Credit Union loans

If you're in need of a loan but you've been rejected for a credit card, it may be worth talking to your local credit union. It should be able to offer help and advice on your options and it can also point you in the direction of free, independent debt charities if you need them.

How to get a credit builder card

Using a credit builder card can help you to build your credit score, but only if you clear the card every month. These cards tend to have high interest rates and if you're not able to clear the card, they can lead to expensive debts.

Most providers will ask you some questions about your eligibility before you apply, and may offer a free eligiblity checker. This can show you your chances of being approved without harming your credit score as only a soft search is carried out (although always check this is the case first).

What are the best credit builder cards?

The best credit builder card will depend on your own circumstances including your income and credit score. They usually offer low credit limits and need to be cleared each month. Some of the other features may include:

  • Cashback rewards are one incentive for choosing a provider. Capital One offers cash back rewards and no foreign transaction fees, while Tesco Bank offers cashback on eligible purchases with its credit card and it has no annual fees.
  • An initial high APR (annual percentage rate of charge) is available with providers such as Vanquis. A high APR means you'll be paying more interest charges on your outstanding balance, which can make it harder to pay off your debt and keep up with your payments.
  • Some cards come with features such as contactless payments and fraud protection

Does a credit builder card help if I have bad credit?

While the short answer is yes (if used correctly) using a credit builder card isn't the only way to help your credit score.

The sole purpose of a credit builder card is to help you build your credit score over time by using it responsibly. If you are able to make your monthly repayments, you can demonstrate to lenders that you're a responsible borrower. 

There are many advantages to improving your credit score, from accessing other credit products, such as personal loans, mortgages, or traditional credit cards, to better interest rates and higher credit limits.

Although it is important to note that there are no quick fixes for bad credit and it is your responsibility to make changes if you want to see an improvement to your credit score.

The pros and cons of credit builder cards

Credit builder credit cards can be a useful tool for building or rebuilding your credit score, providing you with access to credit and helping you manage your spending. 

Here's a summary of the pros and cons of using a credit builder credit card:

Pros of using a credit builder card

✔️ Credit builder credit cards are one way to establish a credit history, especially if you have little to no credit history

✔️ Consistent and responsible use of a credit builder credit card can help improve your credit score over time

✔️ Credit builder credit cards can be easier to obtain than traditional credit cards, which may require a good credit score or regular income

✔️ Some credit builder credit cards have low fees, making them affordable for those who are trying to establish credit

Cons of Using Credit Builder Cards

❌️ Credit builder cards often have higher interest rates than traditional credit cards

❌️ Credit builder credit cards often have lower credit limits, which can limit your purchasing power

❌️ Credit builder credit cards typically offer limited rewards, such as cashback or points

❌️ If you're not careful, using a credit builder credit card can lead to overspending, which can negatively impact your credit score

Best credit building cards

Building credit is an essential step towards achieving financial stability.

One way to do this is by using credit responsibly. Here are eight of our best credit cards to build credit:

1. Barclaycard Forward card

This card offers a lower credit limit and is designed for students or those with limited credit history. It also offers cashback rewards for responsible use.

Barclaycard Forward Card

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.
  • No annual fees.

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.

2. Tesco Bank Foundation credit card

This card is designed for people with poor credit scores and offers a relatively low credit limit. It also offers Clubcard points for responsible use.

Tesco Bank Foundation Credit Card

Tesco Bank 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.

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. NatWest credit card

This card offers a higher credit limit and is designed for people with average or better credit scores. It also offers cashback rewards for responsible use.

NatWest Credit Card

NatWest Credit Card
Credit Limit
Minimum £250
Representative % APR (variable)
12.9% APR
  • Low rates on purchases and balance transfers.
  • No balance transfer fees.
  • No foreign transaction fees on purchases.

Representative Example – If you spend £1,200 at a purchase interest rate of 12.9% p.a. (variable) your representative APR will be 12.9% APR (variable). Your APR and credit limit may vary depending on your circumstances.

4. Aqua Classic credit card

This card is designed for people with poor or limited credit history and has a relatively low credit limit, making it easier to manage your spending.

Aqua Classic Credit Card

Aqua Classic Credit Card
Credit Limit
Minimum £250
Representative % APR (variable)
34.9% APR
  • Smart credit limits from £250 – £1,200.
  • Build better credit with expert support in the Aqua app.
  • Ability to build your credit score, if you manage your account well.

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

5. Capital One Classic credit card

This card offers a low credit limit and has lower acceptance criteria, making it an excellent option for those with limited credit history.

Capital One Classic Credit Card

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.
  • Interest-free period up to 56 days on purchases each billing period for cleared balances.

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.

6. Vanquis Bank Classic credit card

This card offers a lower credit limit and is designed for people with poor credit scores. It is a good option for those looking to rebuild their credit. This is a very popular credit builder card.

Vanquis Bank Classic Credit Card

Vanquis Bank Classic Credit Card
Credit Limit
Minimum £250
Representative % APR (variable)
39.9% APR
  • Interest-free period up to 56 days on purchases each billing period for cleared balances.
  • Credit limit £250 to £600 (subject to status).
  • No annual fee.

Representative Example – If you spend £250 at a purchase interest rate of 39.9% p.a. (variable) your representative APR will be 39.9% APR (variable). Your APR and credit limit may vary depending on your circumstances.

7. TSB Advance credit card

This card offers a higher credit limit and is designed for people with average or better credit scores. It offers cashback rewards and other benefits for responsible use.

TSB Advance Credit Card

TSB Advance Credit Card
Credit Limit
Minimum £500
Representative % APR (variable)
12.9% APR
  • 0% interest on purchases for the first three months.
  • 0% interest for the first three months on balances transferred within 90 days. 0% balance transfer fee applies in the first 90 days. After 90 days, a 5% fee will apply.
  • Can be used with Apple Pay and Google Pay.

Representative Example – If you spend £1,200 at a purchase interest rate of 12.95% p.a. (variable) your representative APR will be 12.9% APR (variable). Your APR and credit limit may vary depending on your circumstances.

8. Sainsbury's Bank Everyday credit card

This card is designed for people with average or better credit scores so it won't be accessible to everyone. It also offers Nectar points for responsible use.

Sainsbury's Bank Everyday Credit

Sainsbury's Bank Everyday Credit
Credit Limit
Minimum £1,000
Representative % APR (variable)
29.4% APR
  • Qualify for a reduction in your APR.
  • An initial credit limit between £1,000 – £2,000.
  • Collect up to 3 points per £2 spent at Sainsbury’s, Argos, Habitat & Tu clothing when you pay with a Sainsbury’s Bank Credit Card & scan your Nectar card or app. And you’ll get 1 point per £5 elsewhere.

Representative Example – If you spend £1,200 at a purchase interest rate of 29.4% p.a. (variable) your representative APR will be 29.4% APR (variable). Your APR and credit limit may vary depending on your circumstances.

What other types of credit cards are there?

The credit cards and providers that we have already discussed are for those looking to build their credit, but here are some other options too:

0% Purchase Credit Card

A 0% purchase credit card is a credit card that offers an introductory period during which you can make purchases and pay no interest on the balance. However, it's important to ensure you can pay off the balance within the introductory period, as the interest rates can be quite high once the promotional rate expires.

Cashback and reward credit card

A cashback and reward credit card is a type of credit card that offers cashback or rewards points for making purchases with the card.

Cashback credit cards typically offer a percentage of the amount spent on purchases back to the cardholder in the form of cash. For example, a card may offer 1% cash back on all purchases, meaning that for every £100 spent, the cardholder will receive £1 in cash.

On the other hand, reward credit cards offer points or miles for purchases made with the card. These points can then be redeemed for rewards such as travel, merchandise, gift cards, or statement credits.

For example, a card may offer 1 point per £1 spent on all purchases, and the cardholder can redeem those points for rewards such as airline tickets, hotel stays, or gift cards.

These cards are only worthwhile if you actually use the rewards on offer though, there's no point in taking out a credit card with airline rewards if you hardly ever fly anywhere, for example.

Balance transfer credit card

A balance transfer credit card is a credit card that allows you to transfer the balance from one or more credit cards onto a new card, typically at a lower interest rate.

By transferring balances to a balance transfer credit card with a lower interest rate, you can save money on interest charges and pay off your debt faster.

Read our article on balance transfers for a more in-depth explanation.

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About TSB TSB is a UK-based retail and commercial bank. It is a subsidiary of the Sabadell Group. The TSB we know today came to be in 2013, formed from Lloyds TSB Scotland PLC...
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About Union Bank Union Bank, or Union Bank of Nigeria, was founded in 1917 as Colonial Bank. Its name was changed to Barclays Bank Dominion, Colonial and Overseas in 1925 after...
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About Vanquis Bank Founded in 2003, Vanquis Bank is a subsidiary of the Provident Financial Group. It works primarily in service of UK customers with poor, limited or uneven credit...
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