Improve your credit score with a credit builder credit card

Building up your credit score doesn’t have to be difficult. Find out how credit builder cards work and what to look out for.

Tesco Bank Foundation Clubcard Credit Card Mastercard

  • Earn 1 point per £4 spent in Tesco and 1 point for every £8 spent outside Tesco.
  • Manageable monthly repayments from £25.
  • Credit limits from £250.
  • Set up email and text alerts to help you avoid missing repayments and stay in control.
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).

Your credit score makes all the difference when taking out a loan. 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 credit builder credit cards

Comparison ordered by representative APR with affiliated products shown first.
Updated December 11th, 2018
Name Product Min. credit limit Max Credit Limit Rep. APR Loyalty note Representative Example
Vanquis Bank Chrome Card 24.7pc Visa
Vanquis Bank Chrome Card 24.7pc Visa
£250
Subject to status: £1,000
24.7%
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).
£250
Subject to status
27.5%
1 point per £4 spent (£4 minimum) in Tesco and 1 point per £8 spent (£8 minimum) outside Tesco. Must have available credit to earn points. Points are converted to Tesco vouchers or can be exchanged for Partner rewards to receive money off a variety of restaurants, entertainment or Avios points.
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).
Vanquis Bank Chrome Card 29.3pc Visa
Vanquis Bank Chrome Card 29.3pc Visa
£250
Subject to status: £1,000
29.3%
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).
Vanquis Bank Aquis Visa
Vanquis Bank Aquis Visa
£250
Subject to status: £1,000
29.8%
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).
£100
Subject to status: £600
34.9%
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).
Vanquis Bank Visa
Vanquis Bank Visa
£150
Subject to status: £1,000
39.9%
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).
£150
Not specified
24.9%
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).
£250
Not specified
34.9%
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).
£250
Not specified
34.9%
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).
£250
Subject to status: £1,200
35.9%
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).
£100
Subject to status: £300
49.9%
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 up to 4 providers

Finder.com is a credit broker, not a lender, for consumer credit products. Our services are provided at no cost to you, but we may receive a commission from the companies we refer you to.

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.
  • Credit card fees. On most credit cards there will be a set monthly or annual fee, also called an ‘admin fee’. Additional fees are normally levied when you withdraw cash from an ATM, exceed your credit limit, do not make repayments on time, or use your credit card abroad.
  • 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.

What is APR?

Credit card interest rates are usually advertised based on the Annual Percentage Rate (APR) that applies to the account. The APR is essentially the yearly cost to borrow. It is an industry standard term which all lenders must calculate in the same way.

APR can be a useful benchmark for consumers comparing credit cards, as it also takes into consideration any mandatory fees on the account.

However, the Financial Conduct Authority (FCA) states that this rate must be what 51 percent (or more) of people accepted for a card receive. This means that up to 49% of those accepted for a credit card will end up paying a higher rate. That’s why it’s often called “Typical” or “Representative” APR. It’s also important to remember that high fees can be offset by significant perks. A very premium card with a high annual fee is likely to have a high APR (as the APR takes into account the interest rate and the fees), but will also have some tasty benefits for the user.

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.

Pros

  • Build your credit score. The main benefit of this type of card is the ability to restore or build your credit score while making purchases with it.
  • Get access to credit. A credit builder credit card is an entry level option that will give you access to credit, especially when you’ve been refused elsewhere.
  • Enjoy standard benefits of credit card ownership. Having a credit card when travelling is much safer than carrying around cash and is often required for certain services like hiring a car. It also provides protection when lost or stolen as you can easily cancel it to prevent fraudulent transactions.
Cons

  • Unfavorable terms. To protect card issuers against the risk of the loan, a credit builder credit card will often come with high interest rates and low credit limits.
  • Limited rewards. Although some providers do offer 0% purchase periods and cashback, you are unlikely to get more lucrative rewards like air miles, overseas travel, or vouchers and discounts.

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

Back to top

Compare credit card by type or benefit

*Disclaimer: The offers compared on this page are chosen from a range of products finder has access to track details from and is not representative of all the products available in the market. Unless indicated otherwise, products are displayed in no particular order or ranking. The use of terms "Best", "Top", "Cheap" including variations, are not product ratings and are subject to our terms of use. You should consider seeking independent financial advice and consider your personal financial circumstances when comparing products.

Related Posts

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site