Why Use Credit Cards for Bad Credit?

Using a credit card responsibly—making on-time payments and keeping balances low—can significantly improve your credit score over time. If used in the right way, it can establish a positive payment history, and improve financial opportunities over time.

For UK individuals with low credit scores, credit cards providers such as Zable , and Vanquis, are top options to help rebuild credit. These ‘credit-builder cards’ have lower limits, higher interest rates and fewer benefits than other credit cards, but they will allow you to build, or rebuild, your credit rating. Capital One and Ocean are also popular options for people looking to improve or rebuild their credit scores.

Key Strategies to Build Credit

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1. Make On-Time Payments
   Payment history is the most important factor in your credit score, accounting for about 35% of your FICO score. Always pay at least the minimum amount due on time each month. Setting up automatic payments or reminders can help avoid late payments, which can negatively impact your credit for up to seven years.
   
   
2. Keep Credit Utilisation Low
   Your credit utilisation ratio—the percentage of your available credit you use—affects your score. Aim to use less than 30% of your credit limit, ideally between 1% and 10%. Paying down balances before the statement closing date can help maintain a low reported balance.
   
   
3. Pay Off Balances in Full
   Paying your full balance each month prevents interest charges and keeps your utilisation low, which strengthens your credit score. Even if you make small purchases, paying them off promptly demonstrates responsible credit management.
   
   
4. Open the Right Type of Card
   If you’re new to credit or rebuilding, consider a secured credit card or a starter/student card. Secured cards require a refundable deposit but help establish a positive credit history. Student cards often have low limits and fewer fees, making them ideal for beginners.
   
   
5. Become an Authorised User
   Being added as an authorised user on a family member’s or friend’s older, well-managed credit card can boost your score quickly, provided the account has a good payment history and low utilisation.
   
   
6. Maintain Accounts Over Time
   The length of your credit history also impacts your score. Keeping accounts open and in good standing over time helps improve your credit profile.
   
   
7. Monitor Your Credit
   Regularly check your credit reports for errors and track your progress. Many tools, like WalletHub or your card issuer’s portal, allow you to monitor your credit score and ensure your responsible habits are reflected
   

How to Check Your Credit Score for Free

There are a few companies in the UK that allow you to check your credit score for free including ClearScore and Experian. These will usually give you a basic oversight of your accounts and credit score.
If you want a more in-depth credit check then it might be worth signing up a for a free trial with Equifax or Checkmyfile where you can then cancel if you do not want to continue after the free trial period.

These are just some examples of how to use a credit card to improve your credit score but if you have more ideas please let us know in the comments below!