People of all ages may not have applied for a credit card before. Some may prefer to “live within their means” but realise that a credit card, if managed properly, is increasingly necessary to pay for things in the modern world. Students in particular may find the convenience of a credit card useful. If you are a student, it’s likely that you already have a student loan and are making repayments, so you probably have some form of credit history. If that’s the case, even if you’ve never applied for a credit card before, you are off to a good start.What’s your credit history?
If you’ve never taken out any sort of credit agreement before and have no credit history, you may need to look at our guide on Non Status Credit Cards – Options for People with No Previous Credit History. Your credit history is basically a record of how well you’ve managed any existing debts or credit agreements you may already have. That could be monthly mobile phone contract payments, payments into a book club or film club, regular payments to a catalogue for clothes or household items or membership of a gym. If you have such arrangements already in place and you pay them from a bank account by standing order or direct debit, then you will probably have a credit history.
Any lender decides whether to offer you a credit card depending on their considered view of your ability to repay the money they will be loaning you plus whatever interest they charge. They make a judgement about how responsible a borrower you will be and how well you will manage your account before offering you a line of credit.
They base their judgement on whether to give you a credit card largely on the information held on your Credit File or Credit Report. This is a history of all your past credit held by Credit Reference Agencies like Experian, Equifax or Call Credit. You are then assigned a Credit Score. Each Credit Reference Agency has its own scoring system and lenders themselves operate their own Credit Scoring systems. So, just because one company rejects you doesn't automatically mean another one will. Lenders should assess whether you can afford the credit limit assigned and ensure that you only take the credit that you can afford. Some may treat this as more important than others when they determine what your credit limit might be.What determines a successful application?
If you’ve conducted your previous credit agreements pretty well - never missed or made late payments, haven’t exceeded any spending limits you were assigned and are registered to vote with your local council and on the electoral roll - then the chances are that your Credit Score will be good. If that’s the case, it’s very likely that you’ll be accepted for the credit card.Your best chance of success
You can check your own Credit Report using Internet-based services like Credit Expert. This will not only show you the information that lenders see before they decide to give you credit or not, but will also help to detect the early warning signs of identity fraud. If you find that you have an adverse credit rating or low Credit Score, it could be a result of someone else stealing your personal details to buy goods or obtain credit cards using your name.
If you don’t have the Internet, you can write to the Credit Reference Agency, which then has seven working days to get back to you with the information. If you think anything in your credit history is wrong, contact the credit agency to tell them that the entry is incorrect. They may make the correction themselves or ask you to contact the original lender who supplied the information and get them to remove or change the entry. If the information really is inaccurate, they are required by law to change or remove it.See your Credit Report online or by post
If your credit history is not that great or if you have no credit history at all, you may well be refused the card application. If that happens, do not be tempted to immediately go to another lender and “give them a try”. Every time you make an application for credit, a credit search is conducted and this is recorded on your Credit Report. You can view your own file as often as you like and it will not be recorded, but anyone you’ve applied to will log their credit search and it will become part of your credit history.
If your first choice card provider lets you down do not make multiple applications to other possible lenders straight away. It may be best to stop applying for cards in the short term, leaving three – six months between applications – and look at providers of adverse credit credit cards. These are lenders who specialise in cards for people with less than perfect credit histories. By paying off bills, maintaining direct debits, and making membership payments promptly your credit history will eventually recover and you are more likely to be accepted for a regular credit card in due course.