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Last updated
August 15th 2022

What is a bad credit credit card

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.

What is bad credit?

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.

“A low credit score means lenders see you as a higher risk, so you're less likely to be approved for credit or get access to lower-interest-rate products.”

You can find more detailed information in our guide on how to check your credit score.

Credit card providers will use one or all three of the main credit reference agencies in the UK: Equifax, Experian and TransUnion. The table shows what each agency considers a low or high credit score.
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How to get a bad credit credit card

The process for getting a bad credit credit card is just like getting any other card. Just follow these simple steps:
Use our CardFinder

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.

Compare bad credit credit cards

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.

Fill out an application

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.

The importance of using our CardFinder

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.

CardFinder is a fast and low risk way to ensure you only apply for the card you'll be accepted for."

Bad credit credit cards explained

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Expert tips for using bad credit credit cards

  • Use CardFinder. Always use eligibility tools like CardFinder to help you find cards that you can get and avoid a rejected application.
  • Pay your balance in full. Clearing your balance in full will help you avoid the high interest charged on bad credit credit cards. Doing this for several months should also help improve your credit score.
  • Avoid withdrawing cash. Cash withdrawals using your credit are something you should avoid at all costs - unless it’s an emergency. Not only does it incur a fee, you’re also charged daily interest until it is paid off.
  • Pay at least the minimum payment. If you’re unable to pay off the full balance, make sure you at least make the minimum payment by the due date. Failing to do so not only incurs a missed payment fee, but also leaves a mark on your credit report.
  • Use it for everyday expenses. Use your new credit card for everyday expenses rather than large purchases.
% who don't know their credit score[1]
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  • Don’t make multiple applications for credit. Only apply for one credit card at a time. If your application is rejected, refrain from applying for another credit card straight away. Doing so can be seen as a red flag to lenders that you’re desperate for credit, so they'll be less willing to lend to you. Give it time, usually around six months, before applying again.

Advantages and disadvantages of bad credit credit cards

Pros
It’s easier to get accepted for these cards if you have a poor or no credit history
They’re a good way to start building credit, or improving your current credit score
You get Section 75 protection on all purchases worth £100 to £30,000
Cons
They typically charge higher interest rates than standard cards
Credit limits are usually lower compared to standard credit cards
Typically don't offer extra benefits like rewards or 0% interest periods
Learn more about credit scoresRegardless of your credit score, it's useful to know how credit scoring works, whether it’s how it's calculated, what affects it, or what you can do to improve it.
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Other options for borrowing with bad credit

Credit cards are only one way to borrow money if you have bad credit. There are other products that may be more appropriate depending on how much you need to borrow, and their eligibility requirements. Here are some alternatives:
Bad credit loans

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

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 union loans

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.

Budgeting loans

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.

About the author

Salman Haqqi
Salman Haqqi spent over a decade as a journalist reporting in several countries around the world. Now as a personal finance expert, he helps people make informed financial decisions.

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References
1. Credit card facts and statistics 2022 money.co.uk's report on credit card use in the UK