Sometimes, getting credit can be difficult because your credit history is either bad, or you don’t have enough of a history with credit.
If you have never had any form of credit before, then it is likely that you will not be accepted for significant amounts of credit right away, or will be offered only credit that comes with a very high rate of interest.
Equally, if you have in the past fallen into problems with credit and ended up missing repayments, you will also find it hard to get credit at a good rate.
In either of these cases, you will need to take action to repair your credit rating. The first step to doing this is to have a look at your personal credit report, to establish you really do have bad credit or a lack of credit history, and there isn’t another reason why you aren’t being accepted for the credit you want.
Once you have done this, you will need to improve your credit rating, and the solution to doing this that most people find the easiest and most effective is with a credit building credit card.
What are bad-credit score cards?
Also often referred to as ‘credit building credit cards‘, bad credit score cards offer you a relatively low spending limit, with the idea being that as you pay the balance off each month you can prove you can handle credit well, increasing your credit rating over time.
Repairing bad credit won’t happen overnight, but with this kind of card you can at least take some action to improve your credit situation and eventually have access to more credit options.
How do bad credit score cards work?
When you first get your credit card, it will come with a low credit limit – typically allowing you up to £500 of credit. You are free to spend this money, but to get the credit building benefits you need to make sure you repay at least the minimum every month, and never miss a repayment.
Because these credit cards are given to people lenders see as ‘high risk’, the interest rates are high compared to other credit cards, so the best way to use them is to pay them off in full every month.
In fact, the best strategy for building your credit rating with these cards is to get them when you don’t need the credit, use them to buy things you would normally buy with your available money, and pay off the balance in full every month.
If you can’t afford to pay off the full balance at the end of a given month, this won’t be a problem in terms of your credit rating as long as you make the minimum payment, but you will have to pay interest on the remaining balance.
Who are bad credit score credit cards best suited to?
Bad credit score credit cards offer high rates of interest and low credit limits, so usually the people they are best suited to are those who can’t get any other kind of credit. They are good for:
- People who have never had credit before
- People who have a bad credit history
- People who have never used credit cards before and want to start with a low limit to learn how to manage credit responsibly.
There are a wide variety of bad credit score credit cards on the market, and it pays to compare those available and find the one that offers the best deal for you.
If you are currently struggling with high-interest debt then you might benefit from taking a look into the balance transfer cards available. Read our guide on balance transfer cards to find out more.
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