If you’re in between jobs or have a bad credit score, you might think that you’re chances of qualifying for a credit card are slim. But, that’s not necessarily the case.
There are several lenders in the UK who offer credit cards for bad credit and unemployed people, however, they often come at a bigger cost.
To help you make the right choice, we’ve rounded the best places where you can find a credit builder card.
Let’s dive in.
Tesco Foundation Card
Vanquis Chrome Credit Card
Barclaycard Forward Credit Card
Aqua Classic card
OceanFinance Credit Card
You may not be able to get the best credit card deals while you’re unemployed or have bad credit, but you could still get a credit card from lenders that offer credit cards to people with a low credit score.
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One of the best ways to boost your credit score is to get a credit builder card.
These cards are designed for people who have a little-to-no credit history or an adverse credit history, and want to improve their scores.
There are two types of credit builder cards: a regular credit builder card and a credit builder prepaid card.
With a credit builder card, you will get a low credit limit, which you can use to make small purchases.
For example, Tesco’s Foundation Credit Card for unemployed in the UK has starting credit limits of up to £1500.
This card can help you demonstrate responsible borrowing if you pay off the balance at the end of every month, which will improve your credit score over time.
Credit builder prepaid cards don’t require any credit checks, which means you could get one even with a bad credit score.
These cards work like a regular debit card but come with an option to add a credit builder service. If you opt for this service, the provider will lend you a year’s worth of monthly fees (between £5 and £10 a month).
Repaying what you owe on time will boost your credit score.
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The main advantages of getting a credit card during a period of unemployment are:
The drawbacks of credit cards for unemployed individuals are:
Being on benefits doesn’t necessarily mean that you can’t get a credit card, but you probably won’t get the best APR or credit limit.
A good credit score reflects how well you manage your debt and certain finances.
Your employment won’t affect your credit score directly, but losing your income can impact your ability to make repayments. If you fall behind on your repayments, your credit score will drop, which will make it more difficult to get finance in the future.
When deciding whether to accept an applicant, most lenders look at:
Here are the things you should consider before applying for an unemployment credit card:
While credit builder cards can encourage responsible borrowing and help you improve your credit score, they’re not the ideal option for every situation. You should also consider:
Looking for a way to get cash by leveraging your home equity? See our guide on how you can borrow money against your home.
If you’re unemployed or have a poor credit score and looking to borrow a smaller amount of money, then a credit card could be the best option for your situation. What’s more, credit cards can offer you a way to rebuild your credibility as a borrower and help you improve your financial management.
My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.