Credit Cards for Bad Credit – What You Need to Know

I have bad credit and need a credit card, what should I do? Can I get a credit card if I have bad credit?

The simple answer to this question is yes, you can get a credit card even if you have bad credit. However, your options will be limited, and the interest rate will likely be higher as its determined by your credit rating.

Not sure what we mean by your credit rating? Read our blog on what is a credit score .

What is bad credit?

If you’re unsure whether you need a credit card for low credit, first you need to understand what bad credit is. Your credit score is a numerical scale that is an assessment of your financial history. There are three companies that give these scores, and their scales are slightly different, but, in general, a score of around 600 or lower is classed as a bad credit score.

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Why do I have bad credit?

Bad credit can happen for a variety of reasons, where various actions have caused your credit score to drop. Opening lots of bank accounts, missing payments and going over your credit limits can all reduce your credit score. There are also some surprising factors that can affect your credit rating.

If you’ve never borrowed money before, you will have a credit score of zero, which is also classed as a low credit score.

What credit card can I get with bad credit?

It’s always a good idea to shop around for a credit card, or any loan for that matter, especially if you have bad credit. You’re most likely to be approved for credit cards for bad credit, also known as “credit builder cards”. These are designed for people with a poor or no credit history to help them rebuild or grow their score while borrowing a small amount. However, which provider you can get a credit card from will depend on their criteria at the time you apply. Be aware, though, that these will likely have a higher interest rate than other credit cards, as you are seen as a risk with bad credit. Look into credit building credit cards, as these are usually aimed at those who don’t have the best financial history or those who have no borrowing history at all – a comparison site is a good starting point such as Compare the Market or Go Compare.

You should also look carefully at the eligibility requirements for each credit card to get an idea of if you meet them. Each lender will have a different set of eligibility requirements, and while you won’t be guaranteed for the credit card if you meet them, it can increase your chances.

Some services allow you to check whether or not you’ll be approved before you apply, in a way that doesn’t impact your credit score. These checks are called “soft searches”, but these do not guarantee you will get a credit card, and a hard search will still be completed after you apply. – Capital One offers these, for example, and more and more providers are following suit.

Should you apply for a credit card if you have bad credit?

If you have bad credit, there are risks involved with getting a credit card, but there are benefits too. So long as you are confident you will keep up with the repayments and won’t max out your credit limit, a credit card is a good way to build your credit score. However, if you’ll struggle with the repayments, a credit card could reduce your credit score further.

Benefits of getting a bad credit credit card

• You can increase your credit score so long as you pay the monthly payments on time and stay within your credit limit
• Credit cards for bad credit have less strict eligibility criteria

Disadvantages of getting a bad credit credit card

• If you use the card irresponsibly and don’t keep up with the repayments, you’ll worsen your credit score
• Bad credit credit cards tend to have higher interest rates, which can cost you a lot if you don’t make full repayments every month
• Credit cards for bad credit often come with a low credit limit, though if you use the card responsibly, this can be increased in time.

How to increase your chances of getting a credit card with poor credit

There are a number of ways you can improve your credit profile to increase your chances of getting a credit card:

• Pay off existing debts

  If you can repay any existing debt, then this could mean you come across more favourably to credit card providers you apply to

• Enrol on the electoral register

  Being registered to vote is important to lenders when it comes to verifying your identity and can improve your chances of being approved.

• Ensure your details are correct

  Check your credit report to ensure all of the information featured is correct and applies to you. Any wrong information could negatively impact your credit rating.

• Don’t apply for more than you need

  Applying for larger amounts can impact your ability to pay back what you’ve borrowed, which can impact your ability to pay it back later.

• Don’t apply for too many credit cards at the same time

  As noted earlier, soft check services are great for determining your chances of being accepted, but it’s a good idea to refrain from submitting a full application for more than one card at the same time. Multiple applications will be reflected on your credit history and can raise a red flag with lenders.

Don’t apply for too many credit cards at the same time – As noted earlier, soft check services are great for determining your chances of being accepted but it’s a good idea to refrain from submitting a full application for more than one card at the same time. Multiple applications will be reflected on your credit history and can raise a red flag with lenders.