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Credit cards for bad credit
Choosing a credit card for bad credit
Updated 14 July 2023
If you've a poor credit history, using a credit card to show you can repay on time each month can help rebuild your creditworthiness. Our guide has full info on how to best manage a credit card, plus our Credit Card Eligibility Calculator will show your chances of acceptance before applying, reducing the risk of a failed application.
Not got much credit history? If your credit history is non-existent rather than damaged, see our how to build your credit history and credit builder cards guide.
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What causes someone to have a bad credit record?
Every adult has a credit history, which is a record of how well you've managed credit (such as loans, store cards or credit cards) in the past. Other lenders then use this record when you apply to see if you're a good risk to lend to.
Yet if you've made a few mistakes in the past, such as paying late or missing payments (or even past bankruptcies, defaults and CCJs) then you could appear too high a risk, meaning lenders may not accept you.
However all is not lost as there are special credit cards that are more likely to accept you, even if you've had past problems. If you've a poor credit history, getting one of these cards could be a financial lifeline as – used correctly – it can help heal your creditworthiness by showing you (now) have the ability to repay reliably and on time.
For more info on all the types of credit cards available, see our Credit Cards section, including Balance Transfer Credit Cards if you've existing debt you currently pay interest on.
How to repair your credit report using a credit card
There are pros and cons to credit cards, but follow these rules and it should lead to an improvement in your credit record. You can track changes through free tools, though you'll need patience as it can take several months to see a positive change – it's worth the perseverance.
1. Use your credit card for a small amount of everyday spending each month and NEVER withdraw cash
Instead of using cash or a debit card for spending you'd already planned to make, start using the credit card. Ideally you should limit this to less than 30% of your credit limit (the maximum amount you can spend on the card at one time) as this shows you're not reliant on the borrowing.
The balance in your current account will appear to be higher, though remember you'll need this to repay the credit card at the end of the month. As you spend on the card, try moving that amount from your bank account to an instant access savings account, which you can then transfer back before your credit card bill is due.
If this sounds too much, then try doing smaller spending, say £50, on the card each month, and then paying that back at the end of the month.
Don't be tempted to use a credit card at an ATM for cash. It's not only expensive (often a fee for each withdrawal plus expensive ongoing interest) but repeated cash withdrawals are a red flag to lenders – they can make you look desperate for credit – so can harm your creditworthiness.
2. Repay IN FULL each month
Most cards don't charge interest on spending if you pay the money back in full and on time by the statement due date, so this is the absolute best way if you're able to. Though note this doesn't apply to cash withdrawals, which usually attract interest from day one – part of the reason to avoid taking cash on a credit card.
3. If you can't repay in full, always repay AT LEAST the minimum repayment on time
If you can't repay in full, you won't be able to avoid interest, and it'll be calculated based on your entire balance, even the part you've paid off.
Crucially, the minimum repayment is the lowest amount you must repay each month, on or before your statement due date. This is vital, or you'll likely get both a £10ish late fee and a negative missed payment marker on your credit report (this will damage your chances of getting credit in future).
To ensure you don't miss a payment, set up a monthly direct debit to automatically pay off the minimum amount (or a higher/the full amount if you can). If you know you won't be able to pay, contact your provider immediately and work with it to agree a different repayment plan.
How to apply for a credit card for bad credit
There is no one single top-pick card that can help you rebuild credit as, used correctly, any credit card can boost your rating and for free, if it's repaid in full each month.
If you already have a credit card, use that instead of getting another
Prevent another credit check and follow the steps above to manage your existing credit card, which should have the same impact as a new card.
If you've reached the limit and can't use it for further spending, always ensure you're paying at least the minimum repayment and try to pay off as much as you can, whenever you're able.
See our Persistent Debt Help guide for full help including how to shift existing debt to 0% to clear it quicker and where to find free one-on-one debt help.
If you need to apply for a new card, use our Credit Card Eligibility Calculator to compare cards in your personal best-buy table
Which card to go for will be determined by which will accept you – we've steps below to find your top card, plus help if you can't get any. Before you start, always check your credit reports for any errors as this could be incorrectly damaging your rating (and may impact which cards you can get).
See Check your reports for free for full help.
Usually, applying is the only way to know if you'll be accepted for a credit card. Yet that leaves a 'hard search' on your credit report, and too many of these in a short space of time can affect your ability to get future credit.
To help, our free tool uses a 'soft search' to find your chances of acceptance before applying – and this soft search won't affect your ability to get credit in future. Try it, or read on for a quick how-to and our top tips to find the right card.
Our eligibility calculator will show you your acceptance chances for many cards, including most of our top picks below. We've ordered these by perks, then by representative APR. Some of these cards also have a 0% spending period, but unless you NEED to borrow (and if so, make sure you use the cards the right way – full details are in 0% spending), it's best to use these cards to spend a small amount and pay your card off in full each month to help build a good credit history.
However, any credit card used correctly will have the same impact on rebuilding your creditworthiness, so take this list with a pinch of salt.
Sainsbury's Bank |
- 0% interest on spending for three months - Earn Nectar points on spending - 29.9% rep APR |
Check eligibility |
| Apply* | ||
| Tesco Bank Foundation | - Earn Clubcard points on spending - 29.9% rep APR |
Check eligibility |
| Apply* | ||
| Asda Money Select | - 1% cashback at Asda, 0.3% elsewhere - 34.9% rep APR |
Apply (not in our eligibility calc) |
Capital One |
- 29.8% rep APR |
Check eligibility |
| Apply* | ||
| Post Office |
- 29.9% rep APR | Check eligibility |
| Apply* | ||
| Virgin Money |
- 29.9% rep APR | Check eligibility |
| Apply* |
For more on APRs, see Official APR examples.
What can I do if my credit card application has been declined?
If no credit card is likely to accept you, or you've been declined, it's likely your credit rating won't permit you to get any card. Yet if you apply for too many cards and receive multiple rejections in a short period, you could shoot your credit rating in the foot for years. So for safety, you've now got two options:
- Wait until your bad credit history is less recent. Then try again (see below for how to track changes to your credit rating) and/or...
- Try the 'credit-builder' product below. It's hard to quantify how much of a positive effect using this will have in comparison to waiting a year before applying for credit. However, this option is fee-free (if you open a free account at the end, if not it's £30) and essentially gets you into a good savings habit, so could be worth a try.
If you can't get any credit card, try Loqbox
|
Build your savings pot and your credit history – if you can commit to saving between £20-£200/mth for one year. |
1. You choose a fixed amount (£20-£200) you can save each month for a year, which is then charged to your debit card each month. 2. Loqbox gives you a 0% loan for the total (so £240-£2,400) – you won't be able to access this loan money, but it appears on your credit report as a loan (don't worry, there's no credit check). 3. Your monthly 'savings' are then used to 'repay' the loan over the year, with payments reported to all three credit reference agencies. 4. At the end of the 12 months, you have a fully repaid loan on your credit report (and hopefully an improved score) plus you'll get all your money back. There's a £30 fee to have it paid into your existing bank account, or it's free if you open a new account with one of the banks Loqbox partners with, such as TSB, Monese or Kroo. When coming to withdraw your funds, you'll see next to each provider whether it'll require a hard or soft credit search – Loqbox says most won't require a hard search (of its three partner banks, only TSB does), though be wary if you choose one that does.
|
How do I check my credit score?
The best way to keep track of changes to your credit history is to regularly check your credit reports.
There are three credit reference agencies which hold your credit reports – Equifax, Experian and TransUnion (formerly Callcredit). It's best to check all three reports, because lenders may check one, two or all three when you apply for credit.
All three give you free access to your credit report and score.
- Experian: Use MSE Credit Club
- Equifax: Use Clearscore*
- TransUnion: Use Credit Karma
While your credit score is a good general indicator of how well you're doing, it's not the be all and end all, as it doesn't take in to account other things lenders will know about you when you apply for credit, such as your application data.
So, by all means monitor your credit score as it's a decent way to easily keep track, but don't assume that once your credit score's "excellent" that you'll get accepted for any and all credit - that's just not how it works.
See our How to check your credit report for free guide for full help and our Credit Score guide for more tips on how to improve your overall creditworthiness.
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