What is a credit-builder credit card?
A credit-builder credit card is specially designed to help you improve your credit. If you have a low credit score – or if you don’t have any credit history at-all – you may have trouble finding a lender who’ll offer you credit. That’s where a credit-building card comes in. It gives you a way to borrow money and, by managing your account well, show lenders that you can be trusted to pay it back on time. Plus, there are lots more advantages of using a credit card that you’ll enjoy, too.
Why do I need to build my credit?
Building better credit could help you become eligible for a wider range of credit products. When you apply for products like credit cards, loans, car finance or mortgages, lenders use your credit records to help them decide whether they can give you credit – and if so at what rate. The higher your credit score, the more likely you are to be offered the best deals, like lower interest rates, interest-free periods or cashback.
Who are credit-builder cards for?
A credit-builder card is ideal for you if you have a low credit score. This might be because, for example, you’ve previously missed repayments on credit products or gone over your credit limit. A credit-builder card can also help you if you don’t have any credit history – perhaps because you’re a first-time borrower or you’ve recently come to live in the UK.
How do credit builder cards work?
A credit-builder card works by giving you a way to prove that you’re a responsible borrower. By managing your credit account well – making at least the minimum payment on time every month and staying below your credit limit – you can build up a history of good credit that will be recorded on your credit file. All UK lenders have access to these records and will check them if you apply for their credit products. If they like what they see, you’re more likely to get the ‘yes’ you want.
Check that you’re on the electoral register
The electoral register is an official record that lenders can use to confirm you’re who you say you are. That’s why it’s important to keep your name on it, even if you don’t plan to vote.
Always pay bills and make debt repayments on time
If you’re late with a payment – even by just a day or two – your credit score can suffer. A missed payment can sit on your credit record for up to seven years.
Make sure your credit record is up to date
Credit records can sometimes contain mistakes – and these can affect your credit score. It’s worth checking yours regularly to make sure it’s right.
Keep old accounts open and build your credit history
If you have long-standing credit accounts that have been managed well, consider keeping them open. This can show you’ve been a reliable borrower in the past which is a good sign to lenders.
Don’t apply for credit too often
Lenders get nervous if they see a lot of applications for credit on your credit record within a six-month period. That makes them less likely to accept you.
Be a responsible borrower
Managing your existing credit accounts well is one of the surest ways to boost your credit score – helping you get the credit you want in future.
Can I get a credit-builder card if I have poor credit?
A credit-builder card is designed specifically for people like you with poor credit. That means your application is more likely to be accepted than if you were to apply for a credit card for people with good or excellent credit. If accepted, you’ll be given a credit limit that doesn't stretch you too far. The APR (Annual Percentage Rate) is likely to be high, encouraging you to make full repayments on time so you’re not charged interest on your balance.
And if you choose a credit card for bad credit from Aqua, you’ll also get access to a wide range of credit-building tools to help you on your journey. Discover the benefits of Aqua Classic today.