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If your credit score has been damaged, or you don’t have a history of borrowing for credit reference agencies to consider, a credit builder card can help to demonstrate your reliability as a borrower, improving your credit score as a result.
These kind of cards are aimed at:
If you have a history of missed payments or of running up debts in the past, your credit score will have taken a hit.
With a poor credit history, you might struggle to get accepted for a mainstream credit card. A credit-builder card is designed to be more accessible for people who’ve had financial problems in the past.
As long as you borrow responsibly and pay at least the minimum amount on time every month, using a credit-builder card can have a positive effect on your credit score.
If you’ve never taken out any form of credit before - perhaps you’ve just turned eighteen, or maybe you’ve recently moved to the UK - it can be difficult to get accepted for any form of credit. With no credit history, lenders can’t judge whether or not you’re a safe bet to lend to.
Using a credit builder card sensibly, keeping up with repayments and staying within your limit, can work towards building up your credit score. This will in turn reassure lenders that you’re a trustworthy borrower, so you’re more likely to get accepted for good, competitive credit deals in the future.
These cards typically offer a lower credit limit - and higher interest rate - than cards that are available to people with healthier credit scores.
If you don’t like the idea of taking out a credit card - or if you can’t get approved for a credit building card, you can look at other ways to build your credit score.
These can include:
These sorts of cards are designed for people with a limited, or low, credit history, so you have a better chance of being accepted.
However, if you’ve been declined, don’t keep applying for more cards in a short space of time. Every application - and rejection - for credit impacts your credit file. Try to leave a space of at least three months between applications.
It’s best to run a soft check to see your chances of being accepted before you apply.
Our smart search tool allows you to make a soft search for a credit builder card before you proceed with an official application.
This kind of soft search will show you the cards you're likely to qualify for and won't have an impact on your credit history.
Just fill in your details and you'll be shown your chances of acceptance as a percentage for each card.
Most credit cards specify a minimum income requirement. But some specialist lenders do offer credit builder cards for people on a low income, in receipt of benefits or who are unemployed.
Demonstrating responsible borrowing behaviour using a credit builder card can improve your credit score within several months.
For an instant boost to your score, credit reference agency Experian offers the Experian Boost tool. You need to set up an account with Experian which then connects to your current account and scans it for payments and subscriptions that can boost your credit score.
Regular payments into savings, such as an ISA or monthly saver accounts, Council Tax payments and even digital subscriptions such as Netflix and Spotify, paid regularly and on time, can all indicate that you manage your money well and so can go towards boosting your Experian credit score.
Any missed or late repayments can damage your credit score and, depending on the terms and conditions of your card, you could be charged a late fee.
It’s a good idea to set up a monthly direct debit to pay your card off in full - or at the very least, the minimum amount, to ensure you don’t miss a payment.