If you have bad credit, or a low credit score, you’ll find it difficult to get a standard credit card. For most people in that situation, a bad credit credit card may be their best chance of getting the credit they need.
The cards are designed for people with lower credit scores. In practice, this means it's easier to get accepted for one. While you may not be able to get a bad credit card from the more well-known high street banks, or credit providers, there are providers that specialise in bad credit.
Typically, these cards charge higher interest rates, and offer lower credit limits than credit cards offered to people with better credit scores.
Put simply, your credit score is a number that tells lenders how responsible you are with borrowing. It's used by lenders to assess whether you should be offered credit.
All your credit contracts, everything from a monthly phone contract or broadband deal to your overdraft, mortgage and store cards are reported to three ratings agencies (CRA) - Experian, Equifax, and Transunion. Find out more in our guide on how CRAs work.
Each agency calculates your credit score based on your track record of paying bills on time and keeping inside your borrowing limits - this is your credit history. If you’ve been late on a few repayments, or defaulted entirely on some bills, you're likely to have a low score or what's commonly known as bad credit.
You can also have a low score by simply not having much of a credit history - either because you're new to the UK or because you've never borrowed before.
While there's nothing wrong with that, it does mean that lenders don't have a way of knowing whether you're a responsible borrower.
You can sign up to check what is on your credit record with any of the three credit referencing agencies for free.
You can find more detailed information in our guide on how to check your credit score.
If you have bad credit, using CardFinder is the best way to protect yourself from damaging your credit further by applying for cards that you get rejected for. And because CardFinder uses a 'soft search' credit check, you can use it as many times as you want without affecting your credit score.
Once you get your results, you’ll ideally want a card that offers the lowest interest rate for the highest credit limit you can get, but prioritise what’s important to you based on your needs. The results are based on your likelihood of approval, so you can be confident about getting the card you pick.
Applying online is the easiest way, but you can apply by phone, or by visiting a branch. All you have to do is provide your name, contact and other financial details. After that it can take up to a week or more to hear back on whether you've been accepted.
If you have bad credit, the last thing you want is to hurt your credit score further.
CardFinder uses information that you provide about your individual finances to match you with the cards that you can get.
Your personalised results are based on your likelihood of approval, so you can be confident about getting the card you pick and avoiding a rejected application.
APR stands for "Annual Percentage Rate" and is the total cost of borrowing over 12 months. For example, if your APR is 20%, you will be charged 20p for every £1 borrowed over the course of 12 months. If you pay your balance in full and on time, you will not pay interest.
Your credit card balance is how much you owe your credit card provider. In other words, it's the amount of money you've borrowed by using you credit card to buy goods and services. It is also sometimes referred to as your credit card debt.
Your credit limit is how much you are allowed to borrow on your credit card at any one time. If you exceed this amount you can be charged a fee - typically £12 - and it can leave a mark on your credit report.
You are generally not told what your credit limit will be until the end of an application process - although you can ask your provider for a higher one at any time.
Credit limits are awarded based on your credit history and your earnings.
Once you've reached your credit limit you need to make a payment to bring down your balance before you can use the card again. Find out more in your guide on credit limits.
Your credit report is your history of borrowing and paying bills over the past few years. Lenders are required to send this information to three agencies, who compile reports on UK residents.
Before making a decision to lend money to someone, lenders check your report from one of the three credit reference agencies. You can request a copy of your credit report to ensure that there are no mistakes on your file, request changes if you see one and add notes explaining any missed payments.
Your credit score is calculated based on your credit history. Each credit reference agency has its own method of calculating this.
You get points for things like making payments on time and lose them for things like being late or defaulting on a loan. Typically, the higher your score, the more likely you are to be offered a lower rate of interest or higher credit limit.
There is no absolute pass or fail mark attached to a credit score, with each lender making its own decision on what it considers acceptable.
If you miss a few payments, generally between three and six, your credit card provider will send you a default notice, giving you at least 14 days to pay the amount stated on the notice. Court action could be used to recover the debt and if you fail to make the payment your account will be ‘defaulted’, meaning you won’t be able to use your credit card any more. It is possible that your provider may have already blocked spending on your account after the first couple of payments missed. A record of the default will also stay on your credit report for six years, making it harder to get any form of credit throughout this time.
A Direct Debit gives your credit card provider permission to take the stated payment from your bank account each month. You can normally set this to the minimum amount due, a fixed amount, or the full balance.
Credit cards' minimum eligibility criteria is a set of standards required by the provider before they will consider offering you a product. It's designed to help customers understand if they should proceed with an application.
Meeting the minimum eligibility criteria is not a guarantee of approval. Eligibility criteria include factors such as age, salary and sometimes other details, depending on the credit card.
If you’ve made an application for credit, such as a credit card, loan or mortgage, lenders will do an in-depth check of your credit report, which is known as a hard credit check.
It's a detailed look into your financial history, especially your borrowing history, so a lender can see your track record of repaying money you've previously borrowed.
A hard check will show any negative marks on your credit report, like overdue payments, missed payments, previous applications for credit and even bankruptcies.
Every time a hard check is carried out, it leaves a mark on your credit report, which can hurt your credit score.
After this set period you will be charged on any debt remaining on the card at your standard APR. There is also generally a fee attached to money transfers and balance transfers.
While in the interest-free period you'll still have to continue making regularly monthly payments as usual.
Credit card introductory offers can take the form of bonus reward points, extra cashback, 0% on balance transfers or 0% on purchases.
Introductory offers are used to attract new customers, but they run out and revert to the standard offer or rate.
Once the introductory rate has ended, check out whether you are still getting the best deal or whether you need to switch to a different credit card.
Every credit card has a minimum monthly repayment amount set out in its rules, which you can find in the summary box before applying.
This is calculated by working out what interest you've built up over the past month, then adding a small percentage of your total balance to this. If you have a small overall balance there might be a fixed sum instead - for example £5.
Paying more than the minimum monthly repayment will see your card cleared sooner and you charged less interest overall in almost all cases.
A soft credit check is a top-level view of your financial history so lenders can asses you for any offers, or show you what you could potentially be eligible for.
Although a a soft credit check is recorded, it doesn’t leave a mark on your credit file. This means that while you can see them when you look at your own report, lenders can't. That means a soft credit check won’t impact your credit score, but, you’ll be able to see if anyone has checked your credit history.
In certain industries, some employers will perform a soft credit check if you’ve recently applied for a job with them.
These are usually unsecured personal loans. They are meant for those with poor credit histories – or those with a limited or no history at all – who are usually excluded by mainstream lenders.
Interest rates are typically much higher on bad credit loans than normal personal loans. This makes them an expensive option for borrowing money.
Guarantor loans are personal loans where you get a friend or relative to act as guarantor, who agrees to repay the loan for you if you're unable to.
The rates may be lower than bad credit loans because the lender has added security that the loan will be repaid.
Whoever agrees to be the guarantor should be aware of what they’re signing up. Being a guarantor is a major commitment, and they'll need a good credit score and be a homeowner.
Credit unions offer savings and loans to local communities. They are often low cost and significantly cheaper than short-term lenders. If there's one in your area, they could be a good option for a small loan (usually under £3,000).
To borrow from a credit union, you may have to become a member. Some require you to start saving with them first.
These are interest-free loans from the government. The maximum amount you could get is £812 and the money must be used for certain expenses, like advance rent or funeral costs. To be eligible for a budgeting loan, you must have been receiving benefits from the government.
If you're already being paid Universal Credit instead of these benefits, you may get a Budgeting Advance instead. You can apply for a budgeting loan on the gov.uk.