What is bad credit?
Credit card providers decide whether to accept your application by giving you a credit score based on the information in your credit report, your employment status and how much you earn.
Credit card providers always check your credit record. If it puts off most lenders, this is known as bad credit. It can also affect the interest rate and credit limit you are given.
Three main agencies record your credit history: Experian, Equifax and Callcredit.
You can view all of the information that they hold about you - this guide explains how to check your credit report.
The following can harm your credit record: missed or late payments, bankruptcy, mortgage arrears, loan defaults, exceeding your overdraft limit or credit limit, County Court Judgments (CCJs), or lots of previous rejections for credit.
You can find out more about how your credit record works here.
Can you get a credit card with bad credit?
Yes, you may still be able to get a credit card, but it will depend on your financial circumstances.
You will not be accepted by all providers, but some offer credit cards designed for those with bad credit. They work in the same way as other credit cards but are less likely to reject you based on your credit history.
Watch out: 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.
How are they different to other cards?
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.
How to pick the right card
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 to find cards that could accept you even if:
You have missed payments on your credit record
You are unemployed
You have CCJs on your credit record
Check each card before you apply because they will specify a minimum age (usually 18 but sometimes more) and income.
You can check how likely a card is to accept you before you apply. This stops you wasting your time or damaging your credit record with rejected applications.
Keep your costs down
Once you have worked out which cards you can apply for, choose the one with the lowest interest rate. Comparing your options to find a lower APR is important because these cards can be expensive.
The interest rate affects how much you have to repay each month. For example, repaying £2,000 over two years with an APR of 39.9% would cost £738.34 in interest. A card with an APR of 29.7% would charge just £507.37 in interest.
How to use a credit card to rebuild your credit history
Some cards give you free access to your credit report, so you can make sure you are improving it.
Using any type of credit card sensibly over several months or more can help to 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 tells lenders you are a reliable borrower. Only spend what you can afford to pay back straight away.
Stay within your credit limit by keeping track of what you spend through your card providers internet banking service or text message alerts.
Avoid cash withdrawals on your credit card because they are expensive and can harm your credit record.
Some cards increase your credit limit or reduce your interest rate if you repay on time and stay in the credit limit for several months.
What if you still get rejected?
You can still improve your credit history - here is how.
You should be able to get a credit building prepaid card instead because some providers do not run credit checks.
Bad credit FAQs
What if you have no credit record?
You can also use a credit card to build your credit history if you have never borrowed before. Here is how to get your first credit card.
Could using a credit card make your credit record worse?
Yes, if you go over your credit limit, miss repayments, build up too much debt or apply for cards that turn you down your credit record could get worse.
