Credit building credit cards - similar to ‘bad credit’ credit cards - are designed for people who are new to credit and have a low credit score. Or those looking to improve a previously poor credit history.

By using the card regularly, and not missing or being late with payments, a credit building card lets you demonstrate to future lenders that you are responsible with money.

You could have a poor credit history if you have taken out too many loans and found it hard to repay them or missed payments in the past.

You could also find yourself struggling to take out loans because you have no or little credit history, usually because you have never borrowed in the UK before. You can find out more about getting your first credit card here.

Credit builder credit cards work by giving you the chance to show a credit card company that you can repay your debts in full and on time. Doing this improves your credit score.

Credit card companies charge higher interest rates on credit builder cards. They also offer lower credit limits. This is because lenders think there is a risk you won’t repay them.

Over time, as you spend and then repay what you owe on the card, your credit score should improve.

In turn, this should mean that banks and lenders will be more willing to offer cheaper credit products.

Use credit card comparison websites to get the best credit builder credit card offers for you.

Credit building credit cards charge higher interest rates - the annual percentage rate or APR you'll see quoted in the summary box on the card application - than standard credit cards.

So credit building credit cards will never be the cheapest cards on the market. But it's worth shopping around to find the lowest APR offers for you.

Don’t apply for lots of credit builder credit cards at one time. Every application goes on your credit history and can harm your credit rating.

Remember...

Different credit builder cards offer different rewards or services. Compare the APR first to find the cheapest credit card for you, then look at the extras.

For example, some credit builder credit cards let you track your credit score so you can see it improve. Others have an app that breaks down your spending patterns.

Credit builder cards often don’t offer a lot of features or add-ons. So when comparing credit builder cards, the three things you want to focus on are:

• Interest rate

• Minimum credit limit

• Maximum credit limit

While credit builder cards charge much higher interest rates, if you pay off your balance in full each month, you won’t be charged any interest. This can be easier to do because credit builder cards have much lower credit limits. typically ranging from £50 to £1,500.

It’s important to keep up with repayments, as even missing a single payment can damage your credit score further, which defeats the purpose of getting a credit builder card in the first place.

Put simply, no.

Every time you apply for credit in the UK, the company you apply with is required to run a credit check.

If it didn't, people could apply for a dozen cards at once and potentially get all of them - giving them a massive and, in lenders' views, inappropriate amount of credit available to them.

But while you can't apply for a card without a credit check being carried out, you can find out how likely you are to get one before applying.

Eligibility checkers, like our card finder tool above, use something called a "soft search" to check out your credit score. 

This isn't visible to other lenders and means you can check to see if your credit score is good enough for each card before you apply.