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Credit Cards for Bad Credit Best credit cards for bad credit scorers


Applied for a credit card and been rejected? FREEZE! Assess why you've been knocked back, then either find cards that fit your profile or try to rebuild your credit rating using the top 'bad credit' credit card, and always pay it off in full.

Plus find out how to avoid the rejection spiral, and improve your credit history. For extra help on specific issues, see Low Credit Card Limit and Cancel Unused Credit Cards guides. If you don't have a poor credit history, check out the normal Balance Transfer Credit Cards guide.

Why am I being rejected?

Bad credit application rejectionThe financial crisis and recession that followed saw banks wildly change the way they decide to lend money. Essentially, they now want to take fewer risks with their cash. This means if you used to get credit cards fairly easily, you may now struggle.

Yet whether you get given new credit isn't a simple calculation based on how much you earn.

Nor is it about some mythical 'universal credit rating' or blacklist. Lenders 'score' you to predict your likely behaviour, but these scoring systems are never published and differ from lender to lender, and product to product.

The whole game of credit scoring is a convoluted one. To understand how it works, and what the banks judge you on, read the full Credit Rating guide. Importantly, always check the information held about you with the three credit reference agencies is correct, as this plays a big part in lenders' decisions (you can do it for free).

If you've been rejected by all and sundry, then it's likely you've got a poor credit score or a problem with your credit history. Conversely, if you've always been accepted in the past and just been rejected once, then it's possible you simply don't fit one particular card company's customer profile.

If you've had the interest rate you pay on an existing credit card increased, read the Ratejacking guide to rejecting these hikes.

What to do when I'm rejected?

Crucially...

If you're rejected - STOP applying.
First, check your file's correct.
If it is, consider getting a special 'poor credit' card.

Freeze! Apply for too many cards and receive multiple rejection letters in a short period and you could shoot your credit rating in the foot for years. This is the dreaded 'rejection spiral!'

If you haven't applied for a while, or have applied once and been knocked back, you should first check your file for free. Or... use our Pre-Application Eligibility Checker.

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How do I get a card to use?

Once you've worked out whether it was a one-off rejection or down to a poor credit score, you need to plan how to act next. If you need a card for borrowing (either a 0% card for new spending or a top balance transfer credit card deal), use this quick three-step scheme:

Step one

Minimise the new credit you need

If you're after a card to reduce the cost of existing debts, first see if you can achieve the same using the plastic you already have. A special technique can enable you to reduce the interest you pay on outstanding debts without applying for new cards - read the full Credit Card Shuffle guide.

After you've done it, you could have some credit cards with no debt on. You should then check the APR on these if you require plastic to spend on. If your credit rating's a bit shabby, these rates could well be lower than anything you'll get on new cards you apply for.

Step two

Check your eligibility with NO credit file mark

You'll see most cards in this guide have a link to our eligibility checker tool, which we've designed to allow you to see the probability of getting the card.

We do a 'soft' credit search which YOU can see, but lenders CAN'T, so it has no impact on your future creditworthiness - and lets you see the chance of you getting the card without applying for it.

We map the details you give us against lenders' criteria, and show your chances for all the cards on this page that we can do so for. Now you can check without following a link from a specific card.

Check your eligibility here

Step three

No luck? Avoid borrowing

If all your 'perfect matches' come with sky-high interest rates, then it's best you do everything you can to avoid borrowing money. Try our full Money Makeover to cut down on every expense and possibly boost your income, and do a proper budget.

If you're still struggling at this point, you may need to get professional debt help. For a step-by-step checklist of how to act, and a full listing of non-profit debt counselling agencies, read the Debt Problems guide.

What's the best card to rebuild my score?

Rebuild your credit ratingIf you can't get the top deals or a card with decent rates, it's time to look at rebuilding your credit rating. One of the best ways to do this is by getting the right sort of credit card.

By getting any kind of credit, and operating it perfectly (never missing payments, always staying within the limit), you can either build up a credit history from scratch, or remedy a tarnished one.

There are two main paths, depending on how bad your rating is in the first place. Before going any further, though, there's a vital golden rule...

Strictly repay EVERY month, in FULL, so there's no interest cost.

Borrowing new debt on any of these cards - except by strictly using 0% periods - will be hideously expensive and should be avoided at all costs. However, cleverly using one (or even two) of these cards for six to 12 months, spending a little every month and paying it off, can help clean up a muddied credit history, or build one from scratch.

Redress if things go wrong

Before you apply, be aware that only some of the card providers listed abide by the conditions of the Lending Code, which is a code of practice over and above what's required by consumer credit law.

It requires you to be treated fairly by the lender, and has special clauses for how lenders must deal with your account if you've disclosed mental health problems to them or if you've told them you're in financial difficulty. It's an extra layer of protection for you if things go wrong.

Of the cards below, the providers of Barclaycard, Luma and Capital One subscribe to the Lending Code. The firms behind Aqua and Vanquis do not.

TOP CARDS WITH CASHBACK

Capital One Classic Extra*For those with an OK history: 0.5% cashback + £10 bonus

Cap One
  • Representative APR: 34.9% variable
  • Required income: N/A
  • Rate example: Official APR example
  • Any restrictions? CCJs, defaults or bankruptcies may be accepted if over 1 year old.
  • Cashback: 0.5% on spending
  • Max cashback/year: Unlimited
Apply*

If you want a good all-round cashback card, the Capital One* Classic Extra (you can use our eligibility checker for this card) is a good credit rebuilding card. It charges an enormous 34.9% interest so must be paid off IN FULL every month.

As a bonus, it pays 0.5% cashback on all spending (50p for every £100). Plus, accepted cardholders get £10 credited to their account annually. The cashback makes it even more important that you pay off in full, or any gain will be very, very quickly wiped out.

You've got a chance of getting this provided you haven't had any county court judgements (CCJs)/defaults in the past 12 months. If you're trying to build a history from scratch, or have had big problems more recently, then try one of the other cards.

As this card is aimed at those with credit issues, the interest rate is huge (as with all the other cards in this guide). So it's even more vital that you ALWAYS repay in full every month, otherwise you'll be charged 34.9% representative APR.

Top cards with short term borrowing

Barclaycard Initial*0% spending for 3 months, can get it even with CCJs

barclaycard
  • Promo rate: 0% for 3 months
  • Representative APR: 34.9% variable
  • Any restrictions? CCJs, or discharged bankruptcies must be 1+yrs old.
  • Required income: N/A
  • Rate example: Official APR example
Apply*

If you've got payday loans or you're teetering on the brink of an unauthorised overdraft, Barclaycard Initial* (you can use our eligibility checker for this card) gives a respite - but remember it is only a respite - from these more expensive debts. And, used right, it could help rebuild your credit.

You need to be super-organised if you want to repay BEFORE the 0% ends. Keep to a tight budget and be careful.

Fail to clear the card before the three-month 0% interest period ends and you'll be charged a hefty 34.9% representative APR on any balance left. It's cheaper than a payday loan (see the payday loans guide for further alternatives) or unauthorised overdraft, but costs will soon mount up if you don't clear the debt quickly.

TOP Cards allowing balance transfers

Capital One Balance*0% on transfers until November 2014 with 3% fee

CapitalOne
  • Balance transfer length & fee: 0% till Nov, 3% fee
  • Rep variable APR: 34.9% (Official Rate Example)
  • Card issuer: Mastercard
  • Min repayment : Greater of 1% of balance plus interest, or £5
  • Any restrictions? No CCJs or defaults in past 12 months. Max credit limit is £1,500.

For those who’ve had past credit issues, Capital One's* Balance card (you can use our eligibility checker for this card) is 0% on balance transfers until November 2014 with a one-off fee of 3% of the amount shifted.

Those with poor credit histories are usually frozen out of the headline-grabbing 0% deals, so this can be a lifeline as is it doesn't automatically exclude those with defaults or CCJs, as long as they weren't in the last year.

The maximum credit limit is £1,500, and you still have to pass a credit score which'll determine how much you get.

Be very careful though - after the 0% ends the rate jumps to a massive 34.9% representative APR. If possible, try to minimise the amount of debt on it by then as this is extremely costly.

TOP Cards with reducing APRs

Aqua Advance*APR reduces annually if paid on time. Incl £20 voucher.

Cap One
  • Representative APR: 34.9% variable
  • Required income: N/A
  • Rate example: Official APR example
  • Any restrictions? Previous CCJs or defaults may be accepted
Apply*

The Aqua* Advance card (you can use our eligibility checker for this card) starts off by giving you a hideous 34.9% representative APR, but manage your account well and it'll drop each year, until it hits 19.9% rep APR.

It also gives you a £20 voucher after two months if you've paid on time and not exceeded your credit limit. You'll need to continue to keep these conditions for your APR to drop after a year.

This Aqua card is open to people who have CCJs or defaults in their credit past, or have little or no credit history. For this reason, credit limits are low, from £100 to £1,600.

Always repay in full to avoid paying interest on your balance.

Other top cards to rebuild credit score

Aqua Classic*Can get it even with CCJs

Cap One
  • Representative APR: 29.7% variable
  • Required income: N/A
  • Rate example: Official APR example
  • Any restrictions? Previous CCJs or defaults may be accepted
Apply*

The Aqua* Classic card (you can use our eligibility checker for this card) should be used as a credit rebuilding card. It also gives you free access to your credit report, plus alerts when something changes.

It's aimed specifically at borrowers who've previously incurred multiple charges, defaulted on debts or had CCJs, which is why credit limits start low, from £100 to £1,600.

It may also be an emergency tool for those facing repeated bank charges - put a little spending on this instead of from your bank account to get that under the limit, then try and clear the card after (but keep to a tight budget and be careful).

Always repay in full to avoid the 29.7% representative APR.

Alternative cards for rebuilding a bad credit rating
Card
Representative variable APR
Notes
Aquis*
29.8%
Capital One Classic*
34.9%
Luma*
35.9%
Vanquis*
39.9%
In order of representative APR, but as you should avoid ever paying interest, the rate's not crucial. See all Official APR Examples.

The last resort! Buy a prepaid card*It's £65/year, but anyone is guaranteed to get it

Cashplus
  • Application fee: £4.95
  • Monthly fee: £4.95
  • Spending fee: None
Apply*

If you've been rejected for the 'expensive' cards above, there's a last resort option. The Cashplus Creditbuilder* is a prepaid card, meaning you have to load it with cash before spending, rather than having a credit facility, and costs £4.95 to apply for. However, you cannot be rejected for it!

To help rebuild your credit rating, click 'yes' during your application when asked if you're interested in adding Creditbuilder. You'll then be charged a £4.95 monthly fee and as long as you pay the fee every month for a year, this info will be passed on to credit reference agency Experian.

So you pay a £60 charge in £5 monthly instalments to be able to build your credit score. To get the facility, you need to provide proof of ID and address.

If you go this route, you must...

NEVER EVER EVER miss a monthly payment.
It gets reported, leaving you in an even worse position.

Crucially, no credit check is needed to get the card, so it's open to absolutely all. After 12 payments, it should show on your credit history as a fully repaid loan agreement (as the charge is technically a loan). This should make you a more attractive customer to many companies, hopefully meaning you can apply for better credit card and loan deals. Though you are, of course, paying £65 for it!

If you're after the best value prepaid card, don't go for this, read our full Prepaid Cards guide. For more details on this, including pros and cons, read the Cashplus Creditbuilder discussion.

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Think before adding insurance

Payment protection insurance is commonly sold with credit cards - the idea is it'll make some payments for you, usually for a year, if you are unable to (eg, if you lose your job).

But in many cases it has been mis-sold. Some borrowers didn't realise they were signing up for it, or it was totally unsuitable for them. Some big lenders have been fined.

The protection isn't always bad, though policies sold with cards are often overpriced (you pay a monthly amount depending on the size of your balance). If you want it, compare the lender's cover with standalone providers such as Paymentcare or Best Insurance.

Always be vigilant to check you aren't getting more than you bargained for when you fill in the application, then check your statement each month to check you aren't inadvertently paying for extras if you didn't ask for them.

How else can I improve my chances?

While it's not an exact science, there are a number of specific things you can do as good practice to improve both your credit score and lenders' attitudes towards you. For an even more comprehensive list, read the full Credit Rating guide.

  • Get on the electoral roll

    If you're not on the roll, it's unlikely you'll get any credit. Immediately check if you are by calling your council. If you aren't eligible to vote (mainly foreign nationals), send all the credit reference agencies proof of residency and ask them to add a note to your file.
  • Keep up payments and never be late

    Always try to follow at least the minimum repayment plan for your financial products (though paying more is preferable, see the Minimum Repayments guide). Defaulting or missing payments could cause problems that can cost you for years (though you may get past charges back, see the Bank Charges Reclaiming guide).

    If you're in difficulties, the cliche 'contact your lender' is a good one, as it should attempt to help. Changing your repayment schedule is preferable to defaulting - and though it will hit your credit score, it's better than a CCJ against you.
  • Dealing with defaults on your file

    One of the major problems people face are past debt defaults. These can easily hamper applications for new credit and, if they're genuine and fair, are tough to deal with. There are a few things to try though, particularly if the default is unfair (read the Financial Fightback guide).
    • Complain to the Ombudsman. First write to the company and complain the default isn't fair and lay out your terms. Ask it to wipe it from your file, which it can do if it's disputed. If that fails, complain to the Financial Ombudsman, the free independent arbiter of disputes, as it can rule that the default can be wiped.
    • Negotiate with the lender. If you are prepared to settle the debt, either in part or in full, then you can enter a negotiation with whomever you owe the money. This can include a condition of settlement that the default is wiped off your credit file. Companies are allowed to do this for disputed defaults.
    • Add a notice of correction. If all else fails and you believe the default's justifiably unfair, add a notice of correction to the file explaining the problem, such as: "It was a joint account and the debt was run by my ex-husband/wife once I no longer had access."

      This will slow applications down, as most companies will look at it manually, but as a substantial default is likely to stop you getting credit anyway, that's usually not a problem, providing it helps.
  • Cancel unused credit cards, debts and accounts

    Access to too much credit, even if it isn't used, can be a problem. If you have a range of unused credit cards, cancel most of them. This lowers your available credit and should help (see the Cancel Old Cards guide for full info on what to close when).

    However long-standing bank accounts with good credit histories can be a benefit to your credit score, so they're often best left open.

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