Can I Get a Credit Card with Bad Credit?

If you’re struggling with bad credit, the path to rebuilding your financial health might seem daunting. However, one effective tool that can help you on this journey is a specifically designed credit card for bad credit.

Although these cards typically come with lower limits and higher interest rates, they can be the key to gradually improving your credit score. In this guide, we’ll explore how to get a credit card with bad credit, look at the different options available, and provide tips on using these cards responsibly to build a stronger financial future.

Understanding credit cards with bad credit

Some credit cards are specifically designed for people who have a poor credit history or no credit history at all. These cards are more accessible than traditional credit cards, making them a viable option for those looking to rebuild their credit. However, they come with certain limitations that you should be aware of before applying.

• Lower credit limits: Credit cards for bad credit usually have lower credit limits compared to standard cards. This means you won’t be able to borrow as much, which can be a good thing if you’re trying to manage your spending and avoid getting into further debt.

• Higher interest rates: These cards often have higher interest rates, reflecting the increased risk that lenders take on when offering credit to individuals with poor credit scores. This means that carrying a balance on your card can become expensive, so it’s important to pay off your balance in full each month if possible.

• Limited rewards: Unlike premium credit cards that offer perks such as cashback, credit cards for people with bad credit typically offer fewer rewards, if any. The main reward with these cards is the opportunity to rebuild your credit score by demonstrating responsible use.

How to get a credit card with bad credit

Getting a credit card with bad credit is possible, but it requires careful consideration and research. Here’s a step-by-step guide on how to get a credit card with bad credit:

1. Check your credit score

Before applying for any credit card, it’s essential to know where you stand. You can check your credit score for free through various online services, such as Experian and ClearScore. Knowing your score will give you an idea of which credit cards you might be eligible for and help you to identify areas that need improvement.

2. Research credit card options

Once you have a clear understanding of your credit score, it’s time to research credit cards designed for people with bad credit. Many banks and financial institutions offer these cards, so take the time to compare different options.

Consider factors such as interest rates, fees, credit limits and any available rewards. Remember, the goal is to find a credit card that will help you rebuild your credit, so prioritise low interest rates and manageable fees over rewards.

3. Consider secured credit cards

If you’re struggling to get approved for a traditional credit card for bad credit, a secured credit card might be a good alternative. Secured credit cards require a security deposit that typically serves as your credit limit. For example, if you deposit £200, your credit limit will be £200. Because the deposit reduces the risk for the lender, secured credit cards are easier to obtain, even if you have bad credit.

Secured credit cards function like regular credit cards, with your payment history reported to the credit bureaus. By making on-time payments and keeping your balance low, you can improve your credit score over time.

Where can I get a credit card with bad credit?

If you’ve found yourself asking “what credit card can I get with bad credit?”, the good news is that there may be a few options available to you. Finding the right credit card with bad credit involves researching different lenders and financial institutions. Here are some places to start your search:

Banks and credit unions

Many banks and credit unions offer credit cards specifically designed for individuals with bad credit. Start by checking with your current bank, as they may be more willing to approve your application if you already have an account with them.

Online lenders

Numerous online lenders specialise in providing credit cards for people with bad credit. These lenders often have more flexible approval criteria, making it easier to get a credit card. However, be sure to research the lender’s reputation and read the terms and conditions carefully before applying.

Retail stores

If you frequently shop at a particular store, consider applying for their retail credit card. These cards are often easier to obtain, even with bad credit, but keep in mind that they can only be used at that specific store.

What is the best credit card for bad credit?

Choosing the best credit card for bad credit depends on your individual needs, financial situation and goals. Here are some factors to consider when making your decision:

Interest rates

Interest rates are one of the most important factors to consider when choosing a credit card. Even if you plan to pay off your balance in full each month, it’s wise to select a card with a low interest rate to minimise potential costs.

Fees

Be aware of any fees associated with the credit card, including annual fees, late payment fees and foreign transaction fees. Some credit cards for people with bad credit may have higher fees, so it’s essential to factor these into your decision.

Credit Limit

Whilst most credit cards for bad credit come with lower credit limits, it’s still important to choose a card that offers a limit that meets your needs. Keep in mind that maintaining a low credit utilisation ratio (the amount of credit you’re using compared to your credit limit) is crucial for improving your credit score.

Rewards

Though rewards should not be your primary focus when choosing a credit card for bad credit, some cards do offer cashback or other perks. If you’re able to find a card with rewards that also has favourable interest rates and fees, it could be a good option.

Tips for using your credit card responsibly

Once you’ve obtained a credit card with bad credit, it’s essential to use it responsibly to rebuild your credit score. Here are some tips to help you achieve this:

Make on-time payments

Your payment history is the most significant factor in determining your credit score. Always make your credit card payments on time, as even one late payment can negatively impact your score. Consider setting up automatic payments or reminders to ensure that you never miss a due date.

Keep your credit utilisation low

Credit utilisation refers to the percentage of your available credit that you’re using. It’s recommended to keep your credit utilisation below 30%. For example, if your credit limit is £1,000, try to keep your balance below £300. This shows lenders that you’re managing your credit responsibly.

Avoid applying for multiple credit cards

Each time you apply for a credit card, it results in a hard inquiry on your credit report, which can temporarily lower your credit score. To avoid this, limit the number of credit card applications you submit. The key is to focus on using the card you have responsibly before considering additional credit.

Pay more than the minimum

Whilst it’s important to make at least the minimum payment each month, paying more can help you pay off your balance faster and reduce the amount of interest you pay over time. If possible, aim to pay off your balance in full each month to avoid interest charges altogether.

Alternatives to credit cards

If you’re not ready to apply for a credit card or want to explore alternative ways to rebuild your credit, consider the following options:

Debit cards

Whilst debit cards don’t help you to build credit since they’re linked directly to your bank account, they can be a useful tool for managing your finances. By using a debit card instead of cash, you can track your spending and avoid accumulating debt.

Secured credit cards

As mentioned earlier, secured credit cards are a great option for people with bad credit. They require a security deposit, which reduces the risk for the lender and makes them easier to obtain. By using a secured credit card responsibly, you can rebuild your credit over time.

Credit builder loans

Some financial institutions offer credit builder loans, which are designed specifically to help individuals improve their credit scores. With a credit builder loan, the money you borrow is held in a savings account whilst you make monthly payments. Once the loan is paid off, you receive the funds and your payment history is reported to the credit bureaus. For more information about loans, read our guide Can applying for online loans damage my credit score?

You should now have a better idea of how to get a credit card with bad credit. To help you achieve additional financial goals, check out our guide on how to get a car with bad credit and find out more about how overdrafts work.

For more insights, dive into our blog and find out if you could go a whole year without buying anything new, as well as advice on how to get out of debt. We’ve also got a helpful guide on 5 questions to ask yourself before taking out a loan.

Representative Example

Based on the last working day of each month

Interest rate 288.35% pa (fixed) Representative 1,267.9% APR

Compare payday loans.

Warning: Late repayments can cause you serious money problems. For help, go to www.moneyhelper.org.uk.

*Our guide to financial promotions: https://www.moneyboat.co.uk/fi...