How to get a credit card if you have bad credit

What is bad credit?

Bad credit is the reason why millions of people are refused credit cards or loans. Bad credit is a term that describes a record of past failures to keep up with payments on your credit agreements. This could mean that you made late payments or missed them entirely.

These get included in your credit report where Credit Reporting Agencies (CRA) compile your history as a borrower. The kind of information your credit report is based on includes:

• Details of your bank accounts and borrowing history

• Your employment status, including if you are employed, part-time or self-employed

• Financial links with anyone you share an account with, e.g. a joint mortgage, or joint bank account.

If your credit record shows a history of missing payments and puts off most lenders, then you are likely to have bad credit. This can also affect the interest rate and credit limit you are offered in the future.

What can cause bad credit?

There isn’t one singular reason why you may have bad credit. Having a limited or no credit history can impact your credit score, which affects your ability to borrow as lenders will not consider you creditworthy. 

There are a number of actions which can affect your credit record and lead to bad credit:

• Missed or late payments

• Bankruptcy

• Mortgage arrears

• Loan defaults

• Exceeding your overdraft

• Going over your credit limit

• County Court Judgments (CCJs)

• Previous rejections for credit

You can find out more about how your credit record works, and how to check it, here.

Can you get a credit card with bad credit?

Yes, you may be able to get a credit card even if you have bad credit. However, whether or not you can get a credit card will depend on your financial circumstances.

Some providers offer credit cards designed for those with bad credit. These are usually known as credit building cards. They work the same as other cards but are less likely to reject you based on your credit history.

If you keep applying for cards that reject you, this can further harm your credit record, so it is important to look for cards that are more likely to accept you. You can also take steps to improve your credit history ahead of applying for a credit card.

You can check how likely a card is to accept you before you apply. Checking your credit card eligibility stops you wasting your time or damaging your credit record with rejected applications.

How are credit building cards different from other cards?

Credit building cards are designed specifically for individuals with bad credit. 

They may come with:

• Higher interest rates than other credit cards, often around 30% and above

• Lower credit limits, which set the total amount you can owe on your card at any time

• Fewer perks than the best cards, like balance transfers, cashback and rewards

You can keep the cost down by paying off the full balance every month so you will not need to pay any interest. You can find out more about how credit card charges work.

How to make sure you get accepted

Choose a card that is more likely to accept you by using our comparison of credit cards for bad credit.

Check each card before you apply because they will specify a minimum age (usually 18 but sometimes more) and income requirements.

You can find out more about how you can make sure you get accepted for a credit card here and remember to use our eligibility checker to find the cards most likely to accept you.

Keep your costs down

Once you have worked out which cards you can apply for, choose the one with the lowest interest rate, because this will affect how much you have to repay each month.

Compare credit cards for bad credit here

How to rebuild your credit history

Using any type of credit card sensibly can help strengthen your credit history, which could give you a wider choice of credit cards to apply for in the future. To do this, make sure you:

• Pay off your statement in full and on time each month because this will show on your credit record and tell lenders you are a reliable borrower.

• Stay within your credit limit by keeping track of what you spend through your online banking service or text message alerts.

• Avoid cash withdrawals on your credit card because they are expensive and can harm your credit record.

What if your credit card application is rejected?

Do not reapply straight away, because it could hurt your credit record. If you need to borrow, you could try to get a loan with bad credit.

Before you make another application, check your credit record and see what you can do to improve it.

Even if you cannot get a credit builder card, you should be able to get a credit building prepaid card instead because some providers do not run credit checks.

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