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Credit repair credit cards are also sometimes called credit builder cards or credit cards for people with bad credit.
As the name implies, these are a special form of credit card that enable people with a poor credit score to improve this over time. These cards typically have higher interest rates and much lower credit limits than other types of credit cards.
If you have been refused a credit card or other form of loan due to a bad credit score, then you may find that these are useful as a way of improving your credit score over time.
Credit cards for bad credit should not be used to access more credit and increase your total amount of borrowing. Their purpose is to show you can pay back your balance in full each month and it is this that boosts your credit score over time (subject to how you manage your other debts and finances).
Bad credit loans are for people with low credit scores, or who have little to no credit history. These loans typically have higher interest rates and greater restrictions than other loans however, they can be useful if managed responsibly. Compare bad credit loan rates today.
Credit repair cards work under a simple principle: they allow you to demonstrate that you can responsibly manage a small amount of credit, and so improve a poor credit score over time.
Credit card companies use your credit history and their view on how affordable the credit card is for you to determine if they will accept you for a credit card. If you have no credit score or a low credit score, they may not accept your application.
This is why credit repair cards can be a good way to improve your credit score over time.
They are usually not suitable for large purchases or debt consolidation since the interest rates they carry are higher than other credit cards.
The best way to use credit repair cards is to make small purchases each month, which you then repay in full when you receive your monthly credit card bill.
You should never miss a monthly payment or this will have a decidedly negative effect on your credit score. It could even result in your credit rebuilder card being taken away.
Once your credit score has improved you can then you can apply for another credit card at a lower rate of interest or another form of credit.
The only credit cards you’ll likely be eligible for if you have bad credit are ones aimed at those with low scores. There are several such cards available, with all of them designed to prevent you from getting into unmanageable debt while ideally boosting your credit score, provided you manage them appropriately.
These cards will typically have low credit limits, but will also have much higher APRs than mainstream credit cards for those with a decent credit history. It’s for this reason that they should only be viewed as a way to build your score, and you’ll want to manage them accordingly – use such cards for small purchases each month, and then repay the full balance when the statement arrives. This way, you’re avoiding hefty interest charges while showing future lenders that you’re a responsible borrower, and will raise your credit standing accordingly.
Calculate what you need to know before applying.
Balance transfer calculator – calculate how much you could save by switching to a 0% balance transfer credit card.
Minimum repayment calculator – calculate how long it will take to clear your balance when only making the minimum repayments.
Repayment calculator – calculate how quickly you could pay off your credit card.
If you’ve been denied a credit card, it’s likely because your credit score isn’t high enough to meet the required standard. It’s usually the case that a higher score equals a better chance of being approved for credit, and if you’ve got a low score, you’ll likely be declined for the best cards. This could also be true of those who have never had any form of credit before, and therefore won’t have built up a score at all – no credit history can often be as detrimental as having a bad one, as providers have nothing against which to assess your level of risk.
There are other factors that go into credit card approvals, however, with credit card companies often having their own set of criteria. Income appraisal is often a key part of their approvals process, and if you don’t earn enough to meet their income criteria, you’ll likely be declined.
While there’s nothing that can be done about being declined due to your income – bar trying to increase it, such as by applying for a new job – there are things you can do about poor credit. You can check your credit score and work on improving it, and in the meantime, you may want to consider looking for a card that’s been specifically deigned for those with poor credit scores.
A bad credit score means your credit score is lower than most lenders will accept to give you credit. A credit score is determined by how you have previously managed your debts and you can find out more about this in our guide: How debt impacts your credit score.
Sometimes a low credit score can simply mean that you have never used credit before. A credit score requires you to have a history of using and paying back credit. If you have never applied for credit, then there will be no data to score you.
How do I know if I have a bad credit score?
You can quickly and easily find out your current credit score by using our FREE credit check facility. This enables you to check your current creditworthiness, identify any errors that might be unfairly reducing your score and find out your chances of being accepted for credit. You can also find some tips on how to improve your credit score here too.
These are used by people who have a bad credit score or have not used enough debt to have built up a credit score. Credit builder cards are a way to improve creditworthiness.
While these cards can be used for purchases, it’s a good idea to make sure you can pay off the whole amount owed every month. This is because the interest rates on credit rebuilder cards are higher than on normal credit cards.
Spending carefully and then repaying the whole amount owed each month will steadily improve your credit score – demonstrating that you can use credit sensibly and responsibly.
To find the best deals currently available simply go to the table above.
Here you’ll be able to compare differing credit repair cards by annual percentage rate (APR), as well as take advantage of any special introductory deals being offered. You will also be able to apply directly for some credit repair cards here.
Learn more about bank accounts for bad credit
There are three primary things to consider when applying for a credit repair card:
Credit builder cards could build your credit score in a matter of months, but you’ll need to be strict with how you manage them. Only use them for small purchases and always aim to repay the full balance each month, and if you do, you could soon see your credit score begin to tick up. At the very least, make sure you never miss a repayment – the slightest hint that you’re unable to manage your commitments could lower your score even further, so only ever apply for such a card if you’re confident you can manage the card sensibly and appropriately.
Figuring out how credit card interest works can be a complex and difficult task – the Moneyfacts guide, How does credit card interest work?, gives you an idea of the basics.
Credit repair cards are offered to people who are considered to be a “higher-risk” than those borrowers with a better credit score. This means the credit card provider is taking a larger risk than with an ordinary credit card application. As this risk is greater, the credit card firm charges higher APRs than compared to mainstream credit cards.
Some credit cards have APRs that reduce over time as you become considered less of a risk.
Being refused a credit repair card is a warning sign you should not ignore. If you have been refused, don’t be tempted to apply somewhere else – each failed application you make is logged on your credit history. Consequently, you can hurt your credit score even more by making multiple failed applications.
If you haven’t done so already, use our credit check guide to find out more about checking your credit score and how to apply for your credit file.
It depends on the situation. If you’ve got a lot of credit cards with high available balances on them, then it’s worth cancelling one of them in order to show lenders that you don’t have access to too much credit (already having access to a lot can make it less likely that you’ll be approved for additional finance, as your debt could quickly become unmanageable if you used all the credit available to you).
That said, if you’ve got one card that’s nearing its limit and another that you’ve paid off, it’s worth keeping the latter card open in order to keep your credit utilisation ratio at a reasonable level. You want to only ever be using up to 30% of the credit available to you to show lenders that you can effectively manage your debt, so if you cancelled the paid-off card it could push you well above that desired ratio and could hurt your credit score as a result.
Credit repair cards are designed for people with a poor or no credit score, which means that these cards do not usually have the lowest interest rates or the same promotional offers available with other types of credit cards. However, some credit repair cards may offer a short introductory offer, such as a 0% APR for the first three months, etc.
Credit repair cards will often have higher interest rates than other credit cards, making them a more expensive way to borrow money. For example, other credit cards tend to have APRs of around 18% to 21%, while credit repair cards in comparison can have APRs of 30% to 45%.
If you are using a credit repair credit card to improve your credit, then it is important that you clear your balance every month. The shows the credit reference agencies that you are able to regularly pay back your debts and will steadily improve your score over time. In addition, the higher interest rates make these cards more expensive to use for balance transfers or to roll-over your balance over many months.
Never miss a repayment due on a credit repair card. Doing so will certainly worsen your credit score – it may even result in your card being suspended and your credit card provider demanding immediate repayment of your outstanding balance.
Remember that you may not get the advertised APR for a credit repair card. Providers can and will increase when you apply this if they feel you are a particularly bad risk. This makes it even more important to make sure you pay off the total owed every month to avoid these eye-watering interest rates
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