What you need to know about credit builder cards

For those who maybe haven’t got the credit history they’d like to have, the options for credit cards may be fewer.

But there are credit cards around which are aimed at helping you get your credit history back on track.

How do they work?

These no-frills cards are aimed at people who need to help build their credit history.  They often have low credit limits to start with and a high APR, but paying off the bill each month can help show lenders that you’re reliable.  Applying for too many cards at once can hurt your credit score even more, so it’s an idea to choose a credit card you’re more likely to get, and one that suits your needs best.

When might one be useful?

They could be an option if you’ve found it hard to get a credit card for various reasons. It needn’t just be because your credit score is low – it could be because of your income or job, or because you haven’t had time to build up a credit record yet – for example if you’re new to the UK, or if you’re a young adult with few credit accounts of your own.

Things to remember about them

They’re likely to be no-frills cards – You may have to do without some of the promotional features many credit cards attract customers with, for example cashback, rewards, or interest-free balance transfer or purchase periods . It is also likely to have a lower credit limit and higher interest rate.

Paying it off – However, this makes the need to repay your credit card punctually every month (and in full if you can) even more important, as you’d incur high interest and charges if you don’t.

Don’t apply too many times –  You may think it’s just shopping around, but each time you apply for credit a search is recorded in your credit report.  So knowing more about your chances of being approved could help you decide whether to apply in the first place – so you can work out which credit cards might help with building up a credit history, and which you probably will or won’t get if you apply. If lenders see too many credit applications at once, they might think you’re over-reliant on credit.  So try not to make more than one application in a short period.

Your credit score may initially go down – At first, taking a new credit product such as credit builder card might temporarily cause your credit score to drop. But don’t panic, once the positive factors of the repayments you make take effect, your credit score should reap the benefits.

How do I go about getting a credit builder credit card?

If you’ve found it hard to get a credit card because of your income or job, a poor credit score, or because you’re new to the UK, then a credit builder card may be an option.

Research your options – think about comparing the interest rates, the APR and other features. It’s best to fully understand the terms and conditions of use, and any other features, before you start using your new credit card.

Remember, applying for too many cards at once could affect your chances of getting credit. So making sure you choose one you’re more likely to be accepted for can be important.

Now Experian can help you find credit cards and personal loans you’re more likely to be accepted for, and it won’t negatively impact your credit rating.  

Experian CreditMatcher is a free independent service that helps you compare credit deals, based on your credit information, and gives your Experian Credit Score FREE forever. With Experian CreditMatcher you can  check your chances of being approved by viewing your Eligibility Rating for relevant credit builder cards. We are a credit broker not a lender, working with selected lenders.   

You can compare credit builder credit cards HERE

†Experian acts as a credit broker and not a lender in the provision of its credit cards and personal, car finance and guarantor loans matching services, meaning it will show you products offered by lenders and other brokers.

Experian acts independently and although CreditMatcher shows products for a range of lenders and other brokers it does not cover the whole of the market, meaning other products may be available to you. CreditMatcher services are provided free however we will receive commission payments from lenders or brokers we introduce you to.

CreditMatcher is provided by Experian Ltd (Registered number 653331). Experian Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 009743). Experian Ltd is registered in England and Wales with registered office at The Sir John Peace Building, Experian Way, NG2 Business Park, Nottingham, NG80 1ZZ.

Copyright © 2017, Experian Ltd. All rights reserved

4 thoughts on “What you need to know about credit builder cards

  1. David Nelson

    Now that I have cleared all of my debts I want to rebuild my credit score, I have a default which will come off my file in Nov 17 and am wondering if I should get a credit builder card right away or am I best to wait until the default is gone?

    1. CreditExpert Neil

      Hi David, as a card gets more established it will add more to your Experian Credit Score, you may wish to check with the company that you are applying to though to see if having a default on your report would cause a problem. Kind regards Neil.


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