Credit builder cards: Are they a good way to improve your credit score?

Couple looking at laptop with credit card in hand

Published: 10/11/22

When it comes to borrowing, there are few things more influential than your credit score.

These values, calculated by credit bureaus, represent your borrowing history. They’re used by lenders to determine whether you are reliable and, in their eyes, eligible to borrow.

So, whether you’re in the market for a personal loan, a credit card, or even a mortgage, you can be sure that your credit score will play a role in the application process.

That’s why a lower credit score can sometimes feel like an insurmountable burden holding you, and your financial plans, back.

If you’ve hit a few bumps in the road with your credit score, you’re not alone, and specially-designed products exist to help you improve your credit rating.

Credit builder cards are a well known example of this. You might have heard of them, but how do they work—and are they a good way to build credit?

We’ll explain all in this complete guide to credit builder cards, so that you can find the credit-building solution that works best for your needs.

What is a credit builder card?

A credit builder card is a type of credit card, designed for people with a low credit score, or minimal credit history.

Credit builder card applications are less likely to be impacted by a low credit score than other, more typical credit cards. As a result, they are an appealing borrowing option for anyone hoping to improve their credit, but struggling to get approved.

How does a credit builder card work?

Traditionally, a low credit rating can make building credit difficult—you need to borrow money to improve your credit score. Only, borrowing money becomes harder with lower credit, as lenders will be less likely to approve applications.

Credit builder cards aim to break this cycle, by offering credit options to people who may otherwise find it difficult to get approved.

The idea is that, once you have access to a line of credit, you can start to demonstrate reliability, with frequent borrowing and repayment of smaller amounts using the card. With proper use, this allows the card holder to gradually build up their credit to a point where they can apply for other forms of borrowing and further improve their credit.

To keep repayments manageable, credit builder cards typically have lower credit limits. While this means you can’t borrow as much at a time, it helps avoid any overwhelming large debts building up. APRs can vary with credit builder cards, often depending on the credit score of the applicant.

Pros & cons of credit builder cards

Let’s weigh up the pros and cons of credit builder cards:

Advantages of credit builder cards

  • You’re more likely to be accepted
  • You can start building your credit score, with proper use
  • Purchase protection, similar to other credit cards

Disadvantages of credit builder cards

  • Higher APRs
  • Lower credit limit (the total amount you can borrow at any one time)
  • You risk going into debt and harming your credit score further, if you do not keep up with repayments

Credit builder cards for bad credit

As explained earlier in this guide, credit builder cards are specifically designed for people with a lower credit rating.

So, in a sense, all credit builder cards are for low credit. That said, if you currently have a high debt-to-income ratio (the amount of debt you have relative to your income), the credit card provider may decide that you can’t afford to take on any more debt.

Should I get a credit builder card?

Everyone’s circumstances are different but, as a general rule, the guidelines below can give a broad sense on whether a credit builder card suits your needs.

When to get a credit builder card

A credit builder card is an option worth considering if you have a lower credit score and need a way to borrow in order to start building your credit.

They are particularly beneficial if you are in a position to comfortably borrow and repay in full each month, as this will allow you to demonstrate credit-worthiness to lenders.

When not to get a credit builder card

If you are looking to borrow a lot of money, a credit builder card may not be suitable. They are designed to be used to make frequent, smaller purchases, which can then be repaid in full each month.

If you immediately max out your credit limit and only make minimum repayments, it won’t help your credit score as much and could even negatively impact it, especially if any repayments are missed.

How to get a credit builder card

The first step in the process of getting a credit builder card is to find a credit card provider—and there are a lot of them out there.

Thankfully, we make it easy to find a card provider that suits your needs, by assessing the options, weighing them up based on your circumstances and what you’re looking for.

To start your search, head over to our credit card finder and enter a few details. We’ll then search the market and surface card providers that would be suitable for your financial situation.

To make the list easy to browse, we add labels to each option, so that you can skip the jargon and get straight to the ideal use cases for each card provider available.

So, how does this relate to credit builder cards?

Introducing “Score Booster” cards

When you use our credit card finder to browse lenders, we label some of them as “Score Booster” .

These are cards that are suitable for building lower credit scores, in other words—credit builder cards.

Once you find a Score Booster card that you like, you can apply in just a few clicks.

How to use a credit builder card to improve your credit score

If you want to use a credit builder card to improve your credit score, use it for small amounts and repay it in full each month.

Keep your credit utilisation ratio below 30%. If you had a credit limit of £1,000, for example, you should aim to keep the amount owed under £300.

While you should always aim to make the repayment in full, your credit score won’t be harmed if you only make the minimum monthly repayment. But keep in mind, interest will be applied to any balance rolled over into the next month. To avoid this, try not to borrow more than you can afford to repay. 

So, to recap, here are three things you should aim to do with your credit builder card:

  • Use it for small amounts
  • Repay in full each month
  • Keep your credit utilisation ratio below 30%

What to avoid when using a credit builder card

  • Avoid paying only the minimum monthly repayment, aim to repay in full instead
  • Avoid having your balance carry over to the next month
  • Avoid late, or missed payments
  • Avoid hitting, or exceeding the credit limit

Is a credit builder card worth it?

Credit builder cards can be an excellent way to get a foot in the door and start building—or rebuilding—credit, particularly if other options aren’t available.

But personal finance is, well, personal—and only you can decide what’s right for your needs, your circumstances, and your comfort level.

As a guide to help you make a decision, here’s quick a summary of everything this article has covered:


What is a credit builder card? A credit card designed for people with low credit, or minimal credit history.
How does it work? Credit builder cards are easier to get approved for, providing access to a line of credit that can be used to demonstrate reliable borrowing and  improve credit scores.
  • Higher chance of approval
  • Build credit score, when used correctly
  • Purchase protection
  • Higher APRs
  • Lower credit limits
  • Risk of further debt
How to use a credit builder card
  • Use it for small amounts
  • Repay in full each month
  • Keep credit utilisation below 30%

Find a credit builder card today

Are you ready to start building your credit score?

Finding a credit builder card is easy, simply head over to our credit card finder and enter a few details to get started.

Share this page

Recommended Guides