Compare credit builder credit cards

Credit building cards

We'll show you cards likely to say YES
See your chances before you apply
Searching won't harm your credit score

Find a card

What are credit builder credit cards?

Credit builder credit cards, also known as credit cards for no credit or bad credit, are aimed at people who want to improve their credit score. A credit score is the method that lenders use to tell if you’re a reliable person to lend money, or give credit to.

If your credit score is bad, you’ll find it more difficult to borrow money or get credit. But the problem need not be a permanent one. One way to make it better is to get a credit builder credit card.

What consumers are looking to use their credit cards for

A graph showing the motivations of consumers searching for credit cards and the percentage looking to pay no interest on their spending, build their credit rating, find a low rate card for everyday spending, pay no interest on their spending and other – according to MoneySuperMarket data correct as of July 2018.

Who is a credit builder credit card for?

Credit cards to build credit can be a good choice for people looking for ways to improve their credit score or someone who doesn’t qualify for mainstream deals. If your credit score isn’t great, there are a few different reasons why this might be:

  • You’ve had problems with debt in the past
  • There’s an unpaid bill under your name
  • You previously went bankrupt
  • You have a County Court Judgement (CCJ) against your name
  • You aren’t on the Electoral Register
  • You have no history of borrowing or have never had a credit card

Getting a credit builder credit card is not the instant answer to all your worries. You need to manage your bills and make sure you meet the minimum repayment every month. This is the only way your credit score will improve.

A map showing where people in the UK are looking to apply for a credit builder credit card

A map showing the percentage of people in the UK looking to apply for a credit builder credit card and where they are in the UK, according to MoneySuperMarket data correct as of July 2018.

How does a credit builder card work?

People with bad credit scores are seen as a higher risk by lenders, so these types of cards typically have a higher rate of interest. Credit cards with a good rate of interest are usually only available to those with good credit scores - which is another reason to build yours up if it’s falling short.

While the interest rates might be higher, if you meet the minimum monthly repayment on your credit builder credit card, you shouldn’t have to pay any interest at all. Keeping up-to-date with your monthly payments over the agreed lending term will slowly but surely raise your credit score to a healthier level. The exercise is all about building a level of trust between you and your lender and, by extension, other lenders in the market – and can help to make it more likely that you’re approved for other sources of finance like mortgages and leases in the future.

The percentages of consumers searching for credit cards that are homeowners.

The number of consumers searching for credit builder cards, low rate cards and purchase cards, and the percentage of those consumers that are homeowners and non-homeowners – according to MoneySuperMarket data correct as of July 2018.

What are the downsides of a credit card for bad credit?

Cards like these do typically carry a higher rate of interest and often have low spending limits.

But a credit building card is designed to help you improve your credit score by keeping up with your repayments and avoiding paying interest altogether.

So long as you’re sensible with your spending, keep steady with your repayments and then improve your credit rating, you should qualify for cards with more competitive interest rates and higher spending limits in the future.

A graph showing how many credit cards are gaining interest on their balance

The percentage of credit cards gaining interest on their debt, according to MoneySuperMarket data correct as of July 2018.

Pre-paid cards

Credit cards aren’t the only option for those looking to restore their credit score. Some prepaid cards, which require you to load up cash on them before you spend, also offer a bolt-on credit-builder facility. This is where the card provider effectively ‘lends’ you a year’s worth of monthly card fees upfront.

The loan itself is interest-free, but you will be expected to pay it back over the course of 12 months.

Details of how reliable you are with your payments will be passed to credit reference agencies and, if it’s positive, could help boost your credit score. This means you can help yourself - without risking getting into debt or paying any expensive interest.

How to choose the best credit builder card for you

Some important things to consider when you’re choosing a credit builder card include:

  • Don’t apply for a few at once: if you’re unsure of your credit rating then it’s not a good idea to try your luck and apply for a few different credit builder cards. Applying for a credit card creates what is called a ‘hard check’ on your credit file, and multiple hard checks could harm your score.
  • Check your eligibility: a good way to avoid hard checks is to use an eligibility checker that lets you see a range of different credit cards – and the likelihood of you being accepted. This way, you can consider all your options before you actually make an application.
  • Interest rates: the interest rates offered on credit builder credit cards aren’t likely to be the most competitive. But different providers will offer different rates, so it’s worth checking what’s available.
  • Benefits: different cards might offer different rewards and benefits. Whether it’s in-app banking, access to track your credit score or 24 hour customer service, it’s always good to compare credit builder card benefits. Choose the card that prioritises what you want from your credit builder credit card.

Comparing credit builder cards

As getting accepted is key when applying for credit builder credit cards, using a tool like MoneySuperMarket’s Eligibility Checker lets you compare what’s out there, and shows you the likelihood of you being accepted for each card. It asks for a few details such as your name, address, income and financial situation, and then shows you a list of credit builder credit cards.

Different cards will come with different rates of interest and some will even come with added benefits, such as the ability to earn rewards. You’ll be able to easily browse and weigh up which one suits you best. Once you’ve settled on a card that suits you, simply click through and apply.

The most important thing to remember with this type of card is that you must use it to your advantage. Defaulting on payments will result in you paying hefty rates of interest and getting caught in a debt cycle – and can damage your credit score even more.

It’s important to remember that if you want to be eligible for competitive deals in the future, you need to have a good credit score.

EXPLORE MORE CREDIT CARDS

counter