If you have bad credit in the UK, it can be difficult to obtain a credit card and in this post, we will discuss the best UK credit cards for bad credit.
Many credit card companies are hesitant to approve applications from individuals with low credit scores, as they are seen as a higher risk.
However, having a credit card is important for building and improving your credit score.
In this blog post, we will discuss the best UK credit cards for bad credit, and how they can help you improve your credit score over time.
The Importance of a Credit Card for Building Credit
Credit cards can be a valuable tool for building and improving your credit score.
When you use a credit card, you are borrowing money from a credit card company.
As long as you make your payments on time and keep your balance low, you will be demonstrating to the credit bureaus that you are responsible with credit.
This will lead to an increase in your credit score over time.
It’s important to have a credit card, even if you have bad credit.
A credit card can help you establish a positive payment history, which is one of the most important factors in determining your credit score.
It can also help you improve your credit utilization ratio, which is the amount of credit you are using compared to the amount of credit available to you.
Having a credit card can also be useful in case of an emergency.
If you have a sudden unexpected expense and no other means of paying for it, having a credit card can be a lifesaver.
Additionally, credit cards also offer perks and rewards like cashback, discounts, and points which can be accumulated and exchanged for gifts or travel.
The Different Types of Credit Cards for Bad Credit
When it comes to credit cards for bad credit, there are a few different types to consider:
Secured credit cards: These credit cards require a security deposit, which serves as collateral in case you are unable to make your payments.
The deposit is usually equal to the credit limit on the card. Secured credit cards are typically easier to obtain than unsecured credit cards, as the credit card company has less risk.
Credit-builder credit cards: These credit cards are designed specifically for individuals with bad credit.
They often have higher interest rates and fees than other types of credit cards, but they can help you establish a positive payment history and improve your credit score over time.
Prepaid credit cards: These credit cards work like a debit card, where you load money onto the card and then use it to make purchases.
They don’t require a credit check, but they don’t help you build credit either.
The Best UK Credit Cards for Bad Credit
After researching and considering all the options, the following credit cards are some of the best options for individuals with bad credit in the UK:
Aqua Advance Credit Card: This card is designed for individuals with bad credit, and has a relatively low APR of 35.9%.
It also offers a credit limit of up to £1,200, which can help improve your credit utilization ratio.
Capital One Classic Credit Card: This card is a secured credit card, which means that you will need to make a security deposit of £200.
The card has a relatively low APR of 34.9% and offers a credit limit of up to £200.
Vanquis Credit Card: This card is designed for individuals with bad credit, and offers a credit limit of up to £1,000.
The APR is relatively high at 39.9%, but the card has a rewards program that allows you to earn cashback on your purchases.
Barclaycard Initial Credit Card: This card is specifically designed for individuals with bad credit, and offers a credit limit of up to £1,200.
The APR is relatively high at 34.9%, but the card also offers 0% on balance transfers for the first 6 months, which can help you save on interest.
The Marbles Credit Card: This card is also designed for individuals with bad credit, and offers a credit limit of up to £1,200.
The APR is relatively high at 34.9%, but the card also offers a rewards program where you can earn points for every purchase.
It’s important to note that these credit cards are just a few examples, and there are many other credit cards available for individuals with bad credit in the UK.
You should always compare the different options and choose the one that best fits your needs.
How to Apply for a Credit Card with Bad Credit
When you are applying for a credit card with bad credit, it’s important to do your research and choose the card that is right for you.
Here are a few tips to help you increase your chances of being approved:
Check your credit score: Before you apply for a credit card, check your credit score to see where you stand.
This will give you an idea of which credit cards you are likely to be approved for.
Improve your credit score: If your credit score is low, take steps to improve it before applying for a credit card.
This can include paying off any outstanding debts, disputing any errors on your credit report, and making sure that all of your bills are paid on time.
Be honest about your credit history: When you apply for a credit card, be honest about your credit history.
Lying or exaggerating your credit history can lead to your application being denied.
Choose the right card: Not all credit cards are created equal, so be sure to choose the one that is right for you.
Consider the interest rate, fees, rewards, and other features of each card before making a decision.
Read the terms and conditions: Before you apply for a credit card, be sure to read the terms and conditions.
This will give you an idea of what to expect and will help you avoid any surprises down the road.
Consider a co-signer: If you are having trouble getting approved for a credit card on your own, consider getting a co-signer.
A co-signer is someone who will be responsible for making payments on the credit card if you are unable to.
This can increase your chances of being approved, as the credit card company will have less risk.
Consider a secured credit card: If you are having trouble getting approved for an unsecured credit card, consider getting a secured credit card.
These credit cards require a security deposit, which serves as collateral in case you are unable to make your payments.
Obtaining a credit card with bad credit can be difficult, but it is not impossible.
By choosing the right credit card, being honest about your credit history, and taking steps to improve your credit score, you can increase your chances of being approved.
The credit cards mentioned in this blog post are all great options for individuals with bad credit in the UK.
By using these credit cards responsibly and making payments on time, you can start building a positive credit history and improve your credit score over time.
Remember to always read the terms and conditions and consider all options, such as a co-signer or a secured credit card, to increase your chances of approval.
Frequently Asked Questions
Can Bad Credit Be Fixed?
A bad or non-existent credit history can be fixed with time and some effort.
A credit score is not set in stone. It’s an ever-changing number and when your financial behaviour changes, your rating will also change to reflect that.
If you manage your finances responsibly, and you don’t show reliance on credit, you are likely to be viewed by other lenders as a safe bet for new credit.
How Long Does Bad Credit Last?
Thankfully the negative information on your credit record won’t last forever.
Searches and rejections, which show up on your report when you apply for credit, last around 12 months.
Typically things like CCJs and late payments more than seven years old (10 years for bankruptcies) must be removed from your file.
What’s A Good Credit Score?
Credit scores operate on a sliding scale. The higher your score, the less risky you are deemed to be.
The three main credit reference agencies in the UK; Experian, Equifax, and TransUnion have different credit scoring systems and spectrums.
For example, an Experian credit score will be between 0 and 999. A very poor credit score is deemed anything below 560 – while an excellent score is upwards of 961.
Equifax’s scoring system is out of 1,000, with anything below 438 in the poor range and anything over 811 considered excellent.
You should see how you measure up across all three to get an idea of whether you have a good credit score.
Find out more in our guide on how to check your credit report for free
How Can I Improve My Credit Rating Without A Credit Card?
While it’s not an exact science, there are a number of specific things you can do as good practice to improve your credit score and lenders’ attitudes towards you aside from taking out a credit-builder card.
This includes making sure you are registered on the electoral roll, ensuring any mistakes are rectified and ending associations with ex-flatmates or partners.
Find out more in our guide 8 ways to improve your credit score quickly
Do Credit Builder Cards Come With Section 75 Protection?
Credit cards for bad credit come with the same powerful Section 75 protection as regular credit cards.
So if a credit card payment goes awry you can lodge a claim with your credit card provider quoting Section 75 of the Consumer Credit Act 1974.
What Is My Bad Credit Card APR Higher Than What I Applied For?
Some card firms give those with poor credit histories a higher APR on the card than advertised.
That’s because legally lenders only have to offer 51% of people accepted for the card the advertised APR.
So just because a card says it has a 34.9% representative APR doesn’t mean that’s the interest rate you’ll get.
However, use a credit-builder card in the right way, and you shouldn’t pay any interest, which means the rate you get shouldn’t matter too much.
What If I Can’t Get A Credit Card?
If you’ve tried to take out a credit-builder card and been rejected don’t apply again for credit as it can damage your rating further.
If it’s not essential to obtain credit, you could wait a year and apply again so that the incident that has impacted your score isn’t so recent.
Find out more in our guide on 8 ways to improve your credit score quickly
Can Bad Credit Affect My Car And Home Insurance?
A bad credit history will lower your credit score which is used by a variety of firms to establish your creditworthiness.
This includes car insurance companies and home insurance companies that need to credit-check you when you choose to pay for your premium in monthly instalments.
Will Bad Credit Stop Me From Renting?
It’s not just your finances that are affected when you have bad credit.
Landlords may check your credit when it comes to renting properties to check how reliable you are when it comes to paying bills.