How to get a credit card with bad credit
Written by Robert Bester, Consumer Finance Expert Robert has been a writer for six years, specialising in consumer finance and the UK lending market. Concentrating on consumer credit products, Robert writes informative articles that help customers manage their personal finances efficiently.
25th October 2021
4 minute read
Have you got a bad credit rating but still want to borrow money? If you have ended up with a few black marks against your name, you can quickly end up with bad credit. This can ultimately prevent you from taking advantage of financial products in the future, including a mortgage, which can be crucial if you would like to get on the property ladder.
If you know that you have bad credit (or no credit history at all) but would still like to apply for a credit card, you’ve come to the right place. While it’s undoubtedly harder to get a credit card if your credit history is chequered or you’ve not yet built a credit profile, there are still some options that may be open to you.
Can I get a credit card with a bad credit rating?
You can still get a credit card even if you have a bad credit rating. Although the cards you can apply for are likely to be limited and have higher interest rates, it is still possible to have a successful credit card application.
A good place to start is by checking your credit score. This will make it clear what your financial history looks like and how you appear to major lenders when submitting an application.
Why have I got a bad credit score?
It’s a good idea to fully understand your credit score and what lenders look at when checking to see if you are a suitable candidate for borrowing. The following will significantly lower your credit score:
- Missed or late payments – if you’ve simply missed a payment on a credit card, loan or mortgage it will stay on your credit file for up to 7 years
- Bankruptcy – a legal status you will enter into if you can’t make repayments on debts of over £5,000. Will stay on your file for up to 7 years
- CCJ’s (County Court Judgement’s) – this can be put on your file if you refuse to pay back money to a lender and can stay on for up to 6 years
- IVA (Individual Voluntary Arrangement) – this can be entered into in agreement with creditors you owe money to as a way of paying your debts. They will stay on your file for up to 6 years
In addition, you may have a mistake on your file that can be rectified, or some that will be on your report for a few years. Check out our guide on how long some of the more common financial slip ups will stay on your file. Once you’re up to speed in this area, you’ll be in a much better position to understand your situation and find credit that works for your circumstances. Find out more about your credit rating in our article on understanding your credit score.
What are my options as a high risk borrower?
Those with far less than perfect credit histories may still be able to get credit cards. In fact, there are specialists out there who will consider your application even if you’ve had CCJs or have been made bankrupt in the past. However, as a ‘high risk’ borrower, interest rates for borrowing are likely to be far higher and credit limits will be lower too.
How will that impact on your borrowing behaviour? Well, if you’ve had your fingers burned in the past by borrowing, starting out with a lower credit limit is no bad thing. And with higher interest rates to contend with, you certainly shouldn’t be using bad credit rating credit cards if you can’t afford to pay off the balance of the card in full every month. When you do this, the interest rate becomes somewhat irrelevant because you’ll never need to pay interest.
How to apply for a credit card with bad credit
While you might be keen to get a new credit card and start improving your credit score, it’s important to take your time when choosing the right card.
The worst thing you can do is to start applying for credit cards without doing any research. Chances are you’ll end up with a pile of rejections and an even worse credit score. Instead, follow these simple steps:
- Check your credit score
- Use an eligibility tool such as moneymatcher
- Browse cards that accept a low credit rating
- Once you’re happy with a firm option, apply
Start borrowing responsibly
While you won’t be able to access the most attractive deals with the top mainstream lenders, you may be able to open a card that rewards responsible borrowing behaviours. Some products give you access to better interest rates and limits over time, providing you’ve managed your card well. Make payments on time, never go over your credit limit and not only will you avoid the penalty fees that can hurt your credit rating, but you’ll hopefully make your way back to those more attractive deals in your financial future.
For more information, see our guide to getting your first credit card with confidence.
What credit cards can I get with bad credit?
If you’ve had a few hiccups in the past, you may be focussed on regaining access to credit but there are still lots of card features to look out for within the bad credit market. Sadly, the long term APR you’ll be looking at isn’t going to be low, but if you use your card to spend a little every month and pay it back, it won’t make an impact.
The main thing to watch out for is that the card you’re looking at accepts a low credit rating. These will be ideal for someone with bad credit, and still allow you to make the most of features such as 0% on purchases or 0% on balance transfers, though in a limited capacity to other cards.
When you’re comparing cards, don’t forget that the headline rate isn’t what everyone ends up with. In fact, only 51% of people accepted for the card need to be awarded the advertised APR, so you might be offered a card with a different rate or in the case of a 0% purchase card, a shorter interest-free period.
A great option if you’d like to borrow with the aim of improving your credit rating is a Credit Builder card. As long as you make the monthly repayments you can use the card solely to improve your credit rating so you’re able to borrow better financial products in the future.
Get the right credit card for you
If you’re ready to seek out credit cards of all kinds, our moneymatcher will conjure up deals based on your requirements. It uses a soft search to show deals you’re more likely to be accepted for, so your credit file isn’t impacted. Plus, it breaks down important details such as APR, fees, rewards and features, so you can get a fuller picture of which product is right for you.