Best Credit Cards Credit Builder | Improve Your Credit Score
Singing a credit card credit can help you increase your credit rating if you’ve never borrowed in the past.
Also known as a “bad credit card,” these offers can help you improve your credit score if it has also been damaged by late or missed repayments in the past.
Your credit score reflects your credit report, which shows the ins and outs of your financial past. It’s worth keeping it in the best possible shape to demonstrate your creditworthiness to lenders, keeping options open for future borrowing needs.
To make a credit card work, you’ll need to manage it with care, which means paying off the balance with each monthly statement (interest rates are much higher on these cards).
But, as long as you do, it can take you one step closer to a respectable credit report that will put you on the “good books” of most lenders and, in turn, unlock the debt. best deals.
What are the best manufacturer credit cards?
If you are looking for a builder credit card, what are the best deals?
At ES Money, we did some research (September 2021) and put together some of the best deals we’ve found.
Keep in mind, however, that you cannot benefit from the exact conditions indicated. APRs (Annual Percentage Rates) are only representative, meaning they should apply to 51% of successful applicants. You may also be offered launch periods that are 0% shorter than advertised, or even none.
Always use an eligibility checker, as this means you can assess your chances of being accepted without leaving a mark on your credit score.
1. Tesco Foundation
TAEG representative: 27.5% (variable)
Initial credit limit: £ 200 – £ 1,500
When it comes to credit cards, Tesco’s Foundation Card APR is one of the lowest in the market. Plus, you get free, unlimited access to your credit report for three years (powered by TransUnion).
You will likely get the green light for this card if you haven’t closed an account in the past year due to defaults, or if you haven’t had a County Court (CCJ) judgment in the last year. over the past 18 months. .
The minimum repayment is £ 25 but, to use this card to your advantage, always pay off the balance in full each month.
2. Vanquis Bank Chrome
TAEG representative: 29.5% (variable)
Initial credit limit: £ 250 – £ 1,500
The representative APR of 29.5% (variable) is relatively reasonable on this Vanquis card in the context of the credit builders market. And, to help you keep control of your expenses and reimbursements, it also offers a mobile app, SMS and email alerts.
If you use the card responsibly, your credit limit can be increased up to £ 4,000 over time – with the first potential increase after five months).
Minimum monthly payments are £ 10, but you’ll need to pay off your balance in full if you want to avoid interest, avoid debt, and rebuild your credit score faster.
Note that an APR of up to 59.9% (variable) may be offered depending on your application.
3. Amazon Classic Mastercard
TAEG representative: 29.9% (variable)
Initial credit limit: From £ 500
This card offers benefits beyond the ability to build or rebuild your credit score, like a £ 20 Amazon gift card. This will be uploaded to your linked Amazon account either upon approval (if you qualify for an “instant spend”) or when you activate the card.
The card also offers the first three months of spending at 0%. But that’s arguably an advantage to be avoided if your goal is to stay out of financial hot water.
Making payments on time and staying within your allocated credit limit gives you access to the Amazon Platinum Mastercard. It comes with a better representative APR of 21.9% (variable) and means you can earn reward points on your spending.
Minimum monthly payments are the greater of 3% or £ 5. But if you limit payments on these terms, it will become almost impossible to pay off any balance and could even hurt your credit score, rather than helping it.
4. Classic Post Office Money credit card
TAEG representative: 29.9% (variable)
Initial credit limit: From £ 200
The post office advertises its classic credit card as offering the ability to “rebuild your credit rating” as long as you make your payments on time and stay under your credit limit.
The card also offers an initial three-month 0% on purchases. But, especially when it comes to rebuilding your credit score, it is best to pay off all expenses on the card each month.
Minimum monthly payments on the card are the greater of 3% or £ 5. But if you limit payments on these terms, it will become almost impossible to pay off any balance and could even hurt your credit score, rather than helping it.
5. Barclaycard term credit card
TAEG representative: 33.9% (variable)
Initial credit limit: £ 50 – £ 1,200
This card is a straightforward affair for applicants with weak or weak credit history. Manage the card well during the first 12 months and you will get a 3% reduction on the APR. And continue for the second year and you will get an extra 2% discount.
However, to avoid paying the APR in full, clear your entire balance each month.
The card also offers three months at 0% off purchases but, again, is best used as a tool to rebuild your credit score rather than a way to borrow more.
The minimum monthly payments are set at £ 5.
How are the cards classified?
To arrive at our top five cards in the credit builder arena, we considered a combination of representative APR, credit limits, perks, and helpful spending tools.
Keep in mind that even though the information was correct as of the posting date, offers can and do change. Plus, the best credit card for you will depend on your personal circumstances. For a full list in real time, visit a credit card comparison service.
Here is more information on how credit cards work, along with some frequently asked questions.
What Are Credit Builder Credit Cards?
If your credit report is bad, you are unlikely to have access to traditional credit cards. Credit cards, however, are designed specifically for borrowers who once had financial problems – but now want to show they are responsible.
While these cards offer a good chance of getting the go-ahead, they come with lower credit limits and higher interest rates. Annual Percentage Rates (APRs) tend to be between 29% and 59.9%.
Which providers offer them?
Credit card providers include Aqua, Vanquis Chrome, Marbles, Barclaycard, and Origin.
Why is it important to have a good credit score?
If you have a bad credit history and a below average score, it can be difficult to get anything from a cell phone contract to a mortgage.
By taking steps to improve your credit report in every way possible, you will unlock access to better deals (subject to eligibility and approval) in terms of interest rates, fees and benefits. .
What if I don’t have a borrowing history?
If you’ve never taken out any form of credit before, like a mortgage, loan, or credit card, you won’t have any credit history. And that means you will have to build it from scratch. Applying for a credit card and using it responsibly can be a great way to do it.
Do Builder Credit Cards Really Work?
By spending on your card and making at least the minimum repayment each month, it’s possible to build a record that shows you can be trusted, which increases the likelihood that more lenders will grant you credit in the future.
Most importantly, you’ll need to stick to rules like making your monthly payments on time, never spending more than you can afford to pay off, or going over your credit limit.
The longer term effects of being more in debt will negate any good you do in taking these cards and this is made worse by the higher APRs the cards charge.
Top 5 pitfalls with credit cards
- Missing payments: It is essential that you make your repayments on time and pay at least the minimum amount, otherwise you will be doing your credit score more harm than good. One way to ensure this is to set up an automatic debit.
- Excessive spending: It’s really important that a credit card doesn’t make debt easier. Don’t spend more than you can afford to pay off each month, even if your credit limit may be more than what you ask for or need.
- Just make the minimum repayment: The minimum repayment required on any credit card is set at low levels – often around 1% to 2.5% of the balance. Always pay more than that if you can. This means paying less interest, paying off debt faster, and can even improve your overall credit score.
- Exceed (or extend) your credit limit: Stay within your credit limit by tracking your spending, whether through online banking or an app. In fact, the smaller proportion of your allocated credit limit that you use (called credit usage), the better. Balances below 30% of your limit can result in an additional 90 points on credit reports at Experian, for example.
- Cash withdrawal : Avoid withdrawing cash at all costs. This results in high fees and interest from the card provider from day one, even if you clear the balance at the end of the month. You will also be charged a cash advance fee. And, aside from being an expensive way to access cash, lenders might interpret it as an indication that you are still struggling with debt.
Find the right card
If you still think a credit card is right for you, carefully compare offers using a comparison service.
When you find a card that’s right for you, use an online eligibility checker to check the chances of being accepted. This will ensure that your credit score will not be further damaged if you are rejected.
Keep in mind that the advertised APR may not be what you are offered, as only 51% of applicants need to qualify for the rate that companies present as their typical or representative APR.
You could still be accepted for a credit card, but at an even higher rate. However, it won’t matter if you plan to pay off the balance every month.
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Find the right card for you without affecting your credit score.