Using a credit builder credit card can help you build up your credit rating if you’ve never had any borrowing in the past.
Also known as ‘bad credit credit card’, these deals can help you improve your credit score if it’s been damaged by late or missed repayments in the past, too.
Your credit score reflects your credit record, which shows the ins and outs of your financial past. It pays to keep it in the best shape possible to demonstrate your creditworthiness to lenders, keeping options open for future borrowing needs.
To make a credit builder card work you’ll need to manage it carefully which means paying off the balance with every monthly statement (interest rates are much more expensive on these cards).
But, so long as you do, it can take you a step further towards a respectable credit report that will put you in the ‘good books’ of most lenders and, in turn, unlock the best deals.
What are the best credit builder cards?
If you’re in the market for a credit builder credit card, what are the best deals out there?
Here at ES Money, we carried out some research (July 2021) and put together some of the top deals we uncovered.
Bear in mind however, you may not qualify for the exact terms listed. APRs (annual percentage rates) are only representative, which means they should apply to 51% of successful applicants. You may also be offered shorter-than-advertised 0% introductory periods – or none at all.
Always use an eligibility checker, as it means you can assess your chances of being accepted without leaving a footprint on your credit score.
1. Tesco Foundation
Representative APR: 27.5% (variable)
Initial credit limit: £200 - £1,500
As credit builder cards go, the APR on Tesco’s Foundation card is one of the lowest on the market. What’s more, you get free, unlimited access to your credit report for three years (powered by TransUnion).
You’re most likely to be given the green light for this card if you haven’t had an account closed in the past year because of defaults, or if you’ve not had any County Court Judgments (CCJs) in the last 18 months.
Minimum repayment is £25 but, to use this card to your best advantage, always pay the balance off in full every month.
2. Vanquis Bank Chrome
Representative APR: 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 credit builder market. And, to help you keep control of your spending and repayments, it also offers a mobile app, SMS and email alerts.
If you use the card responsibly your credit limit can be built up to £4,000 over time – with the first potential increase after five months).
Minimum monthly payments are £10 but you will need to pay your balance off in full if you want to avoid interest, stay out of debt and rebuild your credit score faster.
Note, you could be offered an APR of up to 59.9% (variable), depending on your application.
3. Amazon Classic Mastercard
Representative APR: 29.9% (variable)
Initial credit limit: From £500
This card comes with perks beyond the chance to build or rebuild your credit score, such as a £20 Amazon gift card. This will be loaded to your linked Amazon account either on approval (if you qualify for ‘Instant Spend’) or when you activate the card.
The card also offers the first three months spending at 0%. But it’s arguably a perk worth avoiding if your objective is to stay out of financial hot water.
Making payments on time and sticking 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 spending.
Minimum monthly payments are the greater of 3% or £5. But if you limit payments to these terms, it will become almost impossible to repay any balance and could even hinder your credit score, rather than help it.
4. Post Office Money Classic Credit Card
Representative APR: 29.9% (variable)
Initial credit limit: From £200
The Post Office advertises its Classic Credit Card as offering the chance to ‘rebuild your credit rating’ on the proviso you make payments on time and remain under your credit limit. It also offers three months at 0% on
The card also offers an initial three months’ 0% on purchases. But, especially when it comes to rebuilding your credit rating, it’s best to repay all spending on the card every month.
Minimum monthly payments on the card are the greater of 3% or £5. But if you limit payments to these terms, it will become almost impossible to repay any balance and could even hinder your credit score, rather than help it.
5. Barclaycard Forward Credit Card
Representative APR: 33.9% (variable)
Initial credit limit: £50 - £1,200
This card is a straightforward deal for applicants with poor, or little, credit history. Manage the card well in the first 12 months and you’ll get a 3% reduction in the APR. And continue for the second year and you’ll get a further 2% off.
However, to avoid paying the APR altogether, clear your balance in full every month.
The card also offers three months at 0% on purchases but, again it’s best used as a tool to rebuild your credit score rather than a vehicle for borrowing more.
Minimum monthly repayments are set at £5.
How are the cards ranked?
To arrive at our top five cards in the credit builder arena, we’ve considered a combination of representative APR, credit limits, perks and useful spending tools.
Bear in mind that while the information was correct at the date of publication, deals can –and do – change. Also that the best credit builder card for you will depend on your own personal circumstances. For a full real-time list, head to a credit card comparison service.
Here’s more about how credit builder cards work, with some frequently-asked questions.
What are credit builder credit cards?
If you have a blemished credit file, mainstream credit cards are unlikely to be available to you. Credit builder cards, however, are designed specifically for borrowers who have previously got into some financial hot water – but now want to demonstrate they are responsible.
While these cards offer a good chance of being shown the green light, they come with lower credit limits and higher interest. Annual percentage rates (APRs) tend to sit between 29% and 59.9%.
Which providers offer them?
Providers of credit builder cards include Aqua, Vanquis Chrome, Marbles, Barclaycard and Origin.
Why is having a good credit score important?
If you have a blemished credit record and a below-par score, getting anything from a mobile phone contract to a mortgage can prove difficult.
By taking steps to improve your credit file in any way possible, you’ll unlock access to better deals (subject to eligibility and approval) in terms of interest rates, fees and perks.
What if I don’t have a borrowing history?
If you’ve never taken out any form of credit before, such as a mortgage, loan or credit card, you’ll have no credit history at all. And this means you’ll need to build it up from scratch. Applying for a credit builder card and using it responsibly can be a good way of doing this.
Do credit builder cards really work?
By spending on your card and making at least the minimum repayment each month, it’s possible to build up a record that shows you can be trusted, leading to a greater likelihood of more lenders giving you credit in the future.
Crucially though, you will need to stick to the rules such as making your monthly repayments on time, never spending more than you can afford to repay, or exceeding your credit limit.
The longer-term effects being in more debt will cancel out any good you’re doing by taking these cards and this is compounded by the higher APRs the cards charge.
Top 5 pitfalls with credit builder cards
Missing payments: It’s essential that you make your repayments on time and pay at least the minimum amount, or you will do more harm than good to your credit score. One way of ensuring this is to set up a direct debit.
Overspending: It’s really important that a credit builder card doesn’t facilitate more debt. Don’t spend more than you can afford to pay back each month – even though your credit limit may be more than you asked for or need.
Making just the minimum repayment: The minimum repayment required on any credit card is pegged at low levels – often around 1% to 2.5% of the balance. Always pay more than this if you are able. It means paying less interest, clearing the debt quicker and can even help your overall credit score.
Busting (or pushing) your credit limit: Keep within your credit limit by keeping track of your spending – either through online banking or an app. In fact, the smaller proportion of your allocated credit limit you use (known as credit utilisation), the better. Balances below 30% of your limit can translate into 90 extra points on credit reports at Experian, for example.
Withdrawing cash: Avoid making cash withdrawals at all costs. Doing so attracts hefty fees and interest from the card provider from day one, even if you clear the balance at the end of the month. You’ll also be charged a cash advance fee. And, as well as being a pricey way of accessing cash, lenders could interpret it as an indication that you are still struggling with debts.
Finding the right card
If you still think that a credit builder card is right for you, compare deals carefully 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 your credit score is not further damaged if you are rejected.
Bear in mind the APR advertised might not be the one you’re offered, as only 51% of applicants need to qualify for the rate that companies promote as their typical or representative APR.
You could still be accepted for a credit builder card but at an even higher rate. However, this won’t matter if you plan on repaying the balance every month.