What credit cards are available for bad credit scores?

What to consider before you apply for a credit card for bad credit

Cards targeted at people with poor credit tend to have high interest rates. This could be 30-70% APR (annual percentage rate).

Companies market these cards as a way to:

• Better your credit score, and
• Help you get your finances on track

While it is true that such cards can be cheaper than high cost credit like payday loans, the debt can still be expensive and hard to repay.

Be careful before taking out a credit card if:

• You are finding it hard to make ends meet without credit
• You are trying to keep up with repayments on other debts

These are signs you might need debt advice.

What are credit cards for bad credit?

Credit cards for bad credit are called ‘credit-builder’ credit cards. They tend to have:

• Lower spending limits, and
• Higher interest rates than normal credit cards

You might think that you can manage the risk if a firm is offering you a credit card. But, many people think credit builder cards make their situation worse.

Contact us for free, impartial advice if:

• You need help in managing your debts, or
• Want some support in knowing how best to handle credit

We can help you find the best options for you.

Should I use a credit card to improve my credit score?

There are ways to improve your credit score without getting a 'credit-builder' card.

They include:

• Pay back any credit you have borrowed
• Register on the electoral roll
• Check your credit report to make sure it is correct
• Make sure your credit file is not linked to somebody with a poor credit score

Do what you can to avoid falling into debt if you do apply for a credit card with a poor credit score.

Getting out of the credit card rejection spiral

Your credit card application may be rejected if your credit history is bad.

This can even happen with cards for people with bad credit.

Any failed application reduces your credit rating. This is called the ‘rejection spiral’.

There are two things you need to do to avoid this spiral:

1. Do not apply for a lot of credit cards in a short space of time. Getting a lot of rejections in a short period can hurt your credit rating
2. Carry out an online ‘soft search’. Some websites have an eligibility calculator that can tell you:

• Your credit rating, and
• Your chances of a successful application, based on your credit rating

How to manage a credit card for bad credit

Use this sort of credit card with care.

Follow these tips to make sure the card helps your credit rating:

1. Set the balance of the card to be paid in full each month

Interest rates are high, and you could end up paying a lot more than you borrow.

2. Opt out of letting the lender offer you automatic credit limit increases

That way you can control the credit limit.

3. Stick to your credit card limit

Charges and interest can be added if you go over the limit. This makes it harder to get further credit in future.

4. Make sure you pay on time each month

This will help build your credit rating and help you keep any promotional offer that you got with the card.

5. Try to pay the balance in full each month

But if you cannot, make sure you make the minimum payments.

Seek advice and let the lender know if you are struggling to pay.

6. Do not take out cash on a credit card

Lenders see taking out cash as a sign you are having trouble with money.

They may not increase your limit or reduce your interest rate in the future.

7. Check your credit report

Use a soft search every few months to see if your card use is improving your rating.