How to improve your credit score with a credit builder credit card

Your credit score makes all the difference when taking out finance. It will determine the terms you are being offered or whether you will get approved at all. A bad or limited credit history can reduce your chances of getting vital finance, including mortgages, car finance and credit cards. The good news is that you can build up and restore your credit history while you shop with a credit builder credit card.

Compare the best credit builder credit cards

Updated April 22nd, 2019

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Name	Product	Annual/monthly fees	Min. credit limit	Max credit limit	Rep. APR		Incentive	Representative example
Vanquis Bank Chrome Card 24.7pc Visa		£0	£250	Subject to status: £1,000	24.7%	Go to site More Info		Representative example: When you spend £1,000 at a purchase rate of 24.7% (variable) p.a., your representative rate is 24.7% APR (variable).	Compare	loading Fetching your data...
Tandem Bank Journey Credit Card Mastercard		£0	£150	Subject to status: £1,200	24.9%	Go to site More Info	No fees for making purchases or withdrawing cash abroad – currencies are converted at the standard Mastercard exchange rate.	Representative example: When you spend £1,200 at a purchase rate of 24.9% (variable) p.a., your representative rate is 24.9% APR (variable).	Compare	loading Fetching your data...
Tesco Bank Foundation Clubcard Credit Card Mastercard		£0	£250	Subject to status	27.5%	Go to site More Info	Collect 1 Tesco Clubcard point per £4 spent (£4 minimum) in Tesco and 1 Clubcard point per £8 spent (£8 minimum) outside Tesco in each purchase transaction.  Must have available credit to collect Clubcard points. Clubcard points are turned into Clubcard vouchers every 3 months or sooner using Faster Vouchers. Clubcard vouchers can be used in Tesco or with Clubcard Reward Partners to get even more value on dining out, hotel stays and travel.	Representative example: When you spend £1,200 at a purchase rate of 27.542% (variable) p.a., your representative rate is 27.5% APR (variable).	Compare	loading Fetching your data...
Vanquis Bank Chrome Card 29.3pc Visa		£0	£250	Subject to status: £1,000	29.3%	Go to site More Info		Representative example: When you spend £1,000 at a purchase rate of 29.3% (variable) p.a., your representative rate is 29.3% APR (variable).	Compare	loading Fetching your data...
Vanquis Bank Aquis Visa		£0	£250	Subject to status: £1,000	29.8%	Go to site More Info		Representative example: When you spend £1,000 at a purchase rate of 29.84% (variable) p.a., your representative rate is 29.8% APR (variable).	Compare	loading Fetching your data...
ASDA Money Cashback Start Credit Card Mastercard		£0	£100	Subject to status: £600	34.9%	Go to site More Info	Earn Asda vouchers every time you shop - 1% cashback on all Asda spend, 0.2% on all other transactions. Once £2.5 is earnt a voucher can be downloaded to spend in Asda stores.	Representative example: When you spend £1,200 at a purchase rate of 34.9% (variable) p.a., your representative rate is 34.9% APR (variable).	Compare	loading Fetching your data...
Barclaycard Forward Credit Card Visa		£0	£50	Subject to status: £1,200	34.9%	Go to site More Info	Buy tickets for up to 3500 selected live events through Barclaycard entertainment and get 5% off tickets per year and exclusive pre-sale tickets on selected festivals with 10% off ticket prices.	Representative example: When you spend £1,200 at a purchase rate of 34.9% (variable) p.a., your representative rate is 34.9% APR (variable).	Compare	loading Fetching your data...
Vanquis Bank Visa		£0	£150	Subject to status: £1,000	39.9%	Go to site More Info		Representative example: When you spend £1,000 at a purchase rate of 39.94% (variable) p.a., your representative rate is 39.9% APR (variable).	Compare	loading Fetching your data...
118 118 Money Card Mastercard		£14 per month. Customer with a card credit limit of £1200: £14 per month. Customer with a card credit limit of £225: £8 per month. Customer with a card credit limit of £250: £3 per month	£250	Subject to status: £1,200	28.9%	More Info		Representative example: When you spend £1,200 at a purchase rate of 0% (variable) p.a. with a fee of £14 per month. Customer with a card credit limit of £1200: £14 per month. Customer with a card credit limit of £225: £8 per month. Customer with a card credit limit of £250: £3 per month, your representative rate is 28.9% APR (variable).	Compare	loading Fetching your data...
Capital One Classic Platinum Mastercard		£0	£200	Subject to status: £1,500	29.8%	More Info		Representative example: When you spend £1,200 at a purchase rate of 29.84% (variable) p.a., your representative rate is 29.8% APR (variable).	Compare	loading Fetching your data...
aqua Advance Mastercard		£0	£250	Not specified	34.9%	More Info	Free Credit Checker provided by Noddle, customers receive free unlimited access to their credit report.	Representative example: When you spend £1,200 at a purchase rate of 34.95% (variable) p.a., your representative rate is 34.9% APR (variable).	Compare	loading Fetching your data...
Ocean Credit Card Mastercard		£0	£200	Subject to status: £1,500	34.9%	More Info		Representative example: When you spend £1,200 at a purchase rate of 34.94% (variable) p.a., your representative rate is 34.9% APR (variable).	Compare	loading Fetching your data...
aqua Reward Mastercard		£0	£250	Not specified	34.9%	More Info	Free Credit Checker provided by Noddle, customers receive free unlimited access to their credit report.	Representative example: When you spend £1,200 at a purchase rate of 34.95% (variable) p.a., your representative rate is 34.9% APR (variable).	Compare	loading Fetching your data...
Capital One Classic Mastercard		£0	£200	Subject to status: £1,500	34.9%	More Info		Representative example: When you spend £1,200 at a purchase rate of 34.94% (variable) p.a., your representative rate is 34.9% APR (variable).	Compare	loading Fetching your data...
aqua Classic Mastercard		£0	£250	Subject to status: £1,200	35.9%	More Info	Free Credit Checker provided by Noddle, customers receive free unlimited access to their credit report.	Representative example: When you spend £1,200 at a purchase rate of 35.95% (variable) p.a., your representative rate is 35.9% APR (variable).	Compare	loading Fetching your data...
Capital One Luma Mastercard		£0	£200	Subject to status: £1,500	35.9%	More Info		Representative example: When you spend £1,200 at a purchase rate of 35.94% (variable) p.a., your representative rate is 35.9% APR (variable).	Compare	loading Fetching your data...
Capital One Luma Purchase Mastercard		£0	£200	Subject to status: £1,500	35.9%	More Info		Representative example: When you spend £1,200 at a purchase rate of 35.94% (variable) p.a., your representative rate is 35.9% APR (variable).	Compare	loading Fetching your data...
thinkmoney Credit Card Mastercard		£0	£200	Subject to status: £1,500	39.9%	More Info		Representative example: When you spend £1,200 at a purchase rate of 39.94% (variable) p.a., your representative rate is 39.9% APR (variable).	Compare	loading Fetching your data...
Opus Mastercard		£0	£250	Subject to status: £1,200	39.9%	More Info		Representative example: When you spend £1,200 at a purchase rate of 39.95% (variable) p.a., your representative rate is 39.9% APR (variable).	Compare	loading Fetching your data...
aqua Start Mastercard		£0	£100	Subject to status: £300	49.9%	More Info	Free Credit Checker provided by Noddle, customers receive free unlimited access to their credit report.	Representative example: When you spend £1,200 at a purchase rate of 49.94% (variable) p.a., your representative rate is 49.9% APR (variable).	Compare	loading Fetching your data...
Vanquis Bank Origin Credit Card Visa		£0	£150	Subject to status: £1,000	59.9%	More Info		Representative example: When you spend £250 at a purchase rate of 59.94% (variable) p.a., your representative rate is 59.9% APR (variable).	Compare	loading Fetching your data...

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What is a credit builder credit card?

A credit builder credit card is specifically designed as a simple way to improve your credit score over time. It is ideal for someone whose credit score has been damaged and, as a result, struggles to get approval for finance, including mainstream credit cards.

Credit builder credit cards are also seen as entry-level credit. If you’ve never borrowed or taken out a loan, it can be difficult to get the all-clear on a loan application. Lenders have no credit history to analyse and don’t know if they can take the risk in giving you credit. In this situation, a credit builder credit card will help you to build a credit score from scratch.

• It gives you access to credit while at the same time giving you the opportunity to build up your credit score.
• To get credit with a limited or damaged credit score can be very difficult.
• Low barrier to entry and less stringent acceptance criteria means you are likely to get approved even if your credit score is very limited or poor.
• The card will in most cases come with a lower credit limit and higher interest rate (APR) to offset the risk to issuers.
• Once you get accepted, it’s important to manage your debt effectively and pay off your balance every month.
• By doing this you will automatically improve your credit score over time.
• A better credit score will increase your eligibility for higher credit limits, better rates and access to more mainstream credit cards.

What are the features of credit builder credit cards?

The features on a credit builder credit card will be similar to that of a standard credit card but there will be minor variations within the specific features.

• Higher interest rates. The interest charge on a credit card will generally be shown as “APR“. APR stands for Annual Percentage Rate and this is what you’ll pay to the card issuer on top of the money you borrow. The APR includes the credit interest rate as well as any compulsory fees and is averaged out over 12 months. The APR on credit builder cards is higher than on standard credit cards to compensate for the deemed risk issuers are taking. Rates of 35% and above are common among lenders.
• Lower credit limit. Your credit limit is the maximum balance amount you are allowed on your credit card at any one point. This limit will be calculated by the card issuer and is dependent on various factors, mainly your credit score and your annual income. To protect credit providers and reduce the consequences in case of a default, the credit limit on a credit builder card will be much lower. It will generally start between £100 and £1,200.
• Fewer account fees. It’s very rare to see monthly or annual account fees in this space.
• Standard credit card security and protection. Cards are secured by a chip and pin system for physical payments and by a 3 digit security code for online payments.
  Protection is also provided through the Consumer Credit Act against suppliers that fail to deliver goods and services or where a product is misrepresented by marketing.
• Interest-free period. Credit cards often carry an interest-free or grace period. During this period no interest is charged on outstanding balances.
  You will benefit from grace periods if you pay your balance off in full every month as it is only applicable on new purchases and, in most cases, not available on cash advances or balance transfers.
• No-frills credit card. Typically, a credit builder credit card won’t come with any bonuses or extras. The main purpose of these cards is to build up your credit score. If you keep up with your monthly repayments and manage your credit well, your credit limit could be increased and your APR might be reduced. Some providers do offer a short 0% purchase period and basic cashback structures as an introductory offer but this is not common.

How should I compare credit builder credit cards?

Using a credit builder credit card to improve your credit score is a serious decision. To make sure you are choosing the right option for you, there are a few aspects to consider.

• Know the fees and rates. The fee structure on a credit card will give you a good indication if you are able to afford the line of credit. This includes the APR on outstanding balances as well as the mandatory annual fees.
  There are also circumstantial fees to keep in mind that apply in certain situations, like cash withdrawal fees, late payment fees and overseas transaction fees.
• Look out for benefits. Rewards on credit builder credit cards are not common but in some instances the issuer might include basic benefits such as 0% purchase periods and cashback.
  You can save money on interest and fees by choosing a card that has benefits, as long as you stay within the credit limits and pay off the balance in full every month.
• Likelihood of getting approved. The last thing you want to do is to keep applying for credit cards when you keep getting rejected. This will damage your credit score even further and make it more difficult to get credit in the future. There’s often an eligibility calculator that you can use to give you an indication of how likely you are to get approved before applying. This will not affect your credit score and can help you compare credit cards by eliminating options that you are not eligible for.

Are credit builder credit cards a good idea?

It helps to look at both the positives and the negatives when deciding if a credit builder credit card is a good option for your current situation.

What are some things to avoid about credit builder credit cards?

• Never miss your minimum repayments. This will result in additional fees and charges and damage your credit score even further. It’s always better to repay the full amount every month to prove to lenders you can effectively manage your debt.
• Avoid withdrawing cash. Cash withdrawals on any credit card are expensive. The rates on credit builder credit cards are likely to be even higher. If you regularly withdraw cash it might signal to card providers that you are cash strapped and they could refuse you credit going forward.
• If you are rejected, wait before applying for another card. Every time you get rejected for a credit card application, your credit score is impacted. It’s best to take a step back and find out why you were rejected before continuing.

Some final questions you might have

• What factors do lenders use when considering my application?

  Along with your application form, lenders will look at any dealings you have had with them in the past. They will also look at information provided by UK credit reference agencies, such as Experian, which will include court records, electoral rolls and account data from banks and utility companies.

• Should I close unused accounts?

  Ideally, yes. Having too many lines of credit open, even if they are unused, could affect your credit score and your eligibility for approval.

• Where is the best place to apply for a credit card?

  Your bank or building society is a good place to start. Having an existing relationship with credit providers can certainly help. However, don’t assume loyalty will automatically pay. Always shop around and compare, there are many independent credit card companies that might offer a better deal than your normal financial provider.

• What does minimum repayment mean?

  It is the minimum amount you are required to pay towards your outstanding balance every month to avoid additional fees. You might still get charged interest but you won’t be penalised with additional charges.

• What happens if I can’t make a repayment?

  A late payment fee will apply and it will have a negative impact on your credit score. Any card benefits might also be revoked. If you keep within the restrictions of the lender, a credit builder credit card is a simple way to build your credit score and can be a gateway to more favourable terms on a wider variety of financing options.

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Chris Lilly

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Chris Lilly is a publisher at finder.com. He's a specialist in credit-based products including business and personal loans, mortgages and credit cards, and is passionate about helping UK consumers make informed decisions about their borrowing. In his spare time Chris likes forcing his kids to exercise more.