Credit cards for people with bad credit

17th July 2018

By Kurt Wood

It’s not easy to get a credit card if you have a bad credit score, but it’s not impossible. Many credit card companies offer products designed for people with bad credit scores. These are known as “bad credit credit cards”, or “credit builder cards”.

What are bad credit credit cards?

Bad credit credit cards are designed to help you rebuild your credit rating, but they usually have a few restrictions. Because they tend to come with higher interest rates, you should avoid credit builder cards unless you can’t get a credit card any other way.

If your credit score is slightly below average, you may still be able to borrow elsewhere. Bad credit credit cards are suitable for people with poor or very poor ratings, so always check your credit score online before applying.

How do credit checks work?

When applying for any sort of credit (such as a loan, mortgage or credit card), the lender will check your credit file to get a picture of your financial situation. A credit report can reveal how much you owe (and to whom), your spending habits, your ability to make repayments, unsettled debts from previous addresses, any history of fraud and county court judgements (CCJs).

The lender pays a fee to see your personal file from one of the credit reference companies. A footprint is left on your account every time a lender accesses your information, so be careful how often you apply.

If you have been rejected for a credit card, it’s important to stop before you take any further steps. Do not continue applying for more credit cards without understanding why you have been declined. Not only do footprints get recorded, but multiple credit rejections can damage your credit score. This can take years to rebuild.

What should I do before I apply?

As well as checking your credit score online, it’s important to use a credit card eligibility calculator to see which lenders are likely to accept your application. This is the safest way of applying for a credit card and will give you a realistic view of who is most likely to lend to you.

Using an eligibility calculator won’t affect your credit score. Most of the eligibility calculators available on the internet use a ‘soft search’ to bring back results based on your finances. This means that you will be able to see the search on your credit file, but it will be invisible to lenders.

Pros and cons of credit cards for bad credit

The pros

Improve your credit score – bad credit credit cards can be used to show good borrowing behaviour. If you keep within your credit limit and make your repayments on time, you can convince lenders you’re a low-risk customer.

Emergency credit – it’s always good to know that you have emergency credit should you need it. Poor credit customers who would normally not have anywhere to turn can have peace of mind.

Control your spending – some bad credit credit cards may be secured (which means you need to pay an initial deposit) and others may have very low limits. Used responsibly, they can help to control your spending.

Stepping stone for better deals – as you rebuild your credit score, you’ll qualify for better credit card deals in the future.

The cons

High level of interest – very high interest rates are applied to high-risk customers. In order to avoid paying over the odds, it’s important to pay your balance in full every month.

No special offers – bad credit credit cards do not come with the same deals that standard cards come with. You won’t be able to get interest-free periods or no-interest transfers.

Bad credit credit cards with guaranteed approval

Credit cards with guaranteed approval don’t really exist. However, there are a number of options that offer an almost guaranteed acceptance rate.

Secured credit cards

To get a secured card, you have to put down a deposit first. This is an assurance to the lender that you will make repayments on time. If you default on payments, your deposit will be used to cover the debt.

No credit check cards

There’s no such thing as a “no credit check” card, but some lenders do offer cards to people with limited credit history. Individual circumstances will be reviewed, so if your credit file shows missed payments, CCJs or bankruptcy, you may still be able to get credit. Bear in mind that interest rates on these cards will be well above average.

Where can I get more advice?

Yet only around one in six actually seek help with their finances. If you want to improve your credit score, the first thing you need to think about is paying off any debt that you owe. There are a number of ways you can do this if you are really struggling with money and don’t know where to turn.

Here are some options to help you out:

Citizens Advice Bureau – visit the local office in your town/city to get advice on debt management, debt solutions, borrowing, bankruptcy and more.

National debt charities – there are a number of UK charities offering free and impartial advice, including National Debtline, Step Change and The Money Advice Service.

giffgaff gameplan

Copyright ©2018 giffgaff

The giffgaff compare service for credit cards and loans is provided by Runpath Regulated Services Limited which is authorised and regulated by the Financial Conduct Authority – FRN 728244). giffgaff compare is a trading style of Runpath Regulated Services Limited. In relation to credit card and loan services Runpath Regulated Services Limited is acting as a credit broker, not a lender; The table shows a range of products from the market and this service does not consider your personal credit position. Terms and conditions apply. Finance subject to status. 18s and over.

Representative example for a loan of £4,000 for 24 months at an interest rate of 15.5% APR fixed. In this example the total amount payable (including interest and fees) would be £4633.57 and your monthly repayments would be £193.07.

giffgaff receives a fee for introducing personal loans to Retail Money Markets Ltd trading as Ratesetter.

giffgaff gameplan is a trading style of giffgaff Limited, we are a credit broker and not a lender and introduce loan applications to its selected provider of loans Retail Money Market Limited trading as Ratesetter. Terms and conditions apply. Finance subject to status. 18s and over. Credit is provided by Retail Money Market Limited trading as Ratesetter, 6th Floor, 55 Bishopsgate, London EC2N 3AS Ratesetter is authorised and regulated by the Financial Conduct Authority – Firm Reference Number 633741

giffgaff Limited is authorised and regulated by the Financial Conduct Authority, Firm Reference Number - 680957. Registered address – giffgaff Ltd, 260 Bath Road, Slough SL1 4DX. Company Number - 04196996.

Posts on this site reflect the opinion of the members posting only, and not necessarily giffgaff’s opinions or views. There’s a lot of information here that can help you, however, you must remember that we operate an open forum and sometimes messages that are posted are misleading, deceptive, or inaccurate. If you follow these tips, you do so at your own risk. Always do your research and check the terms.