Credit Builder Cards

Quick answer: A credit builder card can help you build or rebuild your credit history, when used responsibly. Compare eligibility, APR (annual percentage rate), credit limits and fees before applying, then pay on time, stay within your limit and, where possible, clear the balance in full each month.

Credit builder credit cards are designed for people with a limited credit history who are wanting to grow their score. If you think this might be the right choice for you, you can compare credit cards to build credit with Experian. Click the link above to get started. Or, read on to learn more about how credit builder cards work, what to compare, and how to use one responsibly.

What is a credit builder credit card?

A credit builder credit card is aimed at helping people who need to build up a credit history from scratch or get their credit rating back on track after being refused credit.

They’re useful if you’ve found it hard to get a credit card for various reasons, like:

• Your income or employment status is not strong enough to get the credit card you want.
• You have a poor credit history and a low credit score.
• You haven’t had time to build up a credit record yet and there isn’t much for lenders to judge you on, for example if you’re new to the UK, if you’re a first-time cardholder or you’ve just turned 18.

How do credit builder cards work?

Credit builder cards usually start with low credit limits and a high APR. This helps lenders reduce the risk of losing money if you can’t repay them. A high APR means you could pay more interest on an outstanding balance, so it’s important to pay off your card in full each month if you can.

You might have to do without some of the promotional features found on other cards, such as rewards and a 0% promotional rate on purchases and balance transfers.

What’s the best way to use a credit card to build credit?

Applying for a credit builder card could cause a temporary dip in your credit score. Over time, managing it responsibly can help you build a positive credit history. By making repayments on time and in full, and staying within the credit limit, you can show lenders that you could be a reliable borrower. This might help your score improve over time, and your provider may consider increasing your credit limit.

Your credit limit, and how much of it you use, can affect your score. It’s usually best to stay under 25% of your limit. For example, if your limit is £2,000, try not to use more than £500 at any one time.

Tips for managing your credit builder card:

• Pay the card off in full every month so you do not have to pay interest.
• Avoid late payments, as you might be charged a fee and your credit limit could be reduced.
• If you can’t pay the statement in full, make at least the minimum repayment. Missing one can affect your credit record and future applications.
• Set up a direct debit to make the monthly repayment when it is due.
• Use text or email alerts so you don’t forget when your next statement is due.

How to get a credit builder card?

You will need to apply for a credit builder card and be approved. The lender will use its own methods and criteria, usually considering information on your credit report and application form, as well as any data it already holds about you.

Credit builder cards are generally designed for people with lower scores or a limited credit history, but this does not guarantee acceptance. You might want to improve your score before applying.

Each time you apply for credit, a hard search will be recorded on your credit report. This can temporarily lower your credit score and may make it harder to be approved, so space out applications and make as few as possible.

How to find and compare credit builder cards

To find the best credit cards to rebuild credit or the best credit cards for building your credit for your situation, compare APRs, fees, starting credit limits and eligibility. Consider how you plan to use the card and whether you can repay the balance in full each month.

It is useful to check your eligibility before you apply. You can see your eligibility rating when you compare credit cards with Experian, helping you understand your chances of approval. Comparing with Experian is free and will not affect your score.

Experian is a credit broker, not a lender. We do not provide credit, but we can help you compare offers from a range of providers.

FAQs

Do you have to have a credit card to build credit?

No. A credit card isn’t the only way to build credit. Other accounts, such as a mobile phone contract or household utility bills, can help show lenders that you manage regular payments reliably. The key is to make payments on time and in full if you can.

Does getting a credit card improve your credit score?

Not automatically. Applying could temporarily lower your score, while managing the card responsibly, by paying on time and staying within your limit, may help over time. Late or missed payments, or using a large proportion of your limit, could have the opposite effect.

Can you have a credit score without a credit card?

Yes. Your credit score can be based on other accounts and payment history shown in your credit report, like loans, overdrafts or mobile phone contracts. You don’t need a credit card to have a score, although limited credit history can leave lenders with less information.

How can I build my credit without a credit card?

Keep payments on mobile phone contracts, household bills, loans and other credit commitments up to date. Paying regularly and on time can help show lenders that you manage financial commitments reliably, even if you do not use a credit card.