Credit builder cards are a type of credit card specifically aimed at people who want to build or improve their credit rating. They typically have lower credit limits and higher interest rates compared to standard credit cards. This is because they are designed for consumers who are considered higher risk to loan to.

These cards are generally easier to qualify for than standard credit cards. You may still undergo a credit check, but the criteria for acceptance are less stringent.

Credit limits on these cards are usually low, often starting between £100 and £1,200. The idea is to keep spending manageable so that you can consistently make payments.

Just like a regular credit card, you can use a credit builder card for everyday purchases, online shopping, or to cover bills.

You must make at least the minimum payment each month by the due date. Paying off the full balance each month is highly recommended to avoid high interest charges.

• Regular, on-time payments are reported to credit reference agencies, helping to build a positive credit history.
  
  

• Provides an opportunity for those with poor or no credit history to access a credit line.
  
  

• Can be used in emergencies or for planned expenses, providing financial flexibility.

The interest rates on credit builder cards are typically higher than those on other credit cards, which can make carrying a balance expensive.

Initially, you may find the credit limit too low for large purchases. However, some issuers might offer increases after demonstrating responsible usage.

Be aware of potential fees, including late payment fees, over-limit fees, or annual fees.

Check if you meet the minimum criteria for application, such as age and residency requirements.

Compare different cards to find one with favorable terms, lower fees, and positive customer reviews.

Once you've chosen a card, you can typically apply online. Be honest in your application to increase your chances of approval.

Use the card for small purchases that you can afford to pay off each month.

Aim to pay off the entire balance each month to avoid interest charges and build your credit more efficiently.

Try to use less than 30% of your credit limit. This is good for your credit utilisation ratio, a key factor in credit scoring.

Keep track of your credit score and report to see your progress. Many card providers or free services allow you to do this.