Rebecca Goodman
Holly Bennett
Before you apply for a credit card, it’s worth having an idea of the process and knowing how to help improve your chances of being accepted.
Here are a few essential application tips worth following.
Choose a credit card
Before you decide which credit card to go for, think about what you want to use it for. This can help refine your search and make sure you’re looking at cards suited to you.
You might want a credit card so you can do one or more of the following:
- start to build a credit history
- transfer other credit card debts on to one card
- pay for occasional high-cost items
- pay for emergency expenses
- pay off an overdraft
- use it when you travel
- rebuild your credit score
- get rewards, including cashback
Then think about how you intend to pay off what you owe:
- Will you pay the whole balance off on time every month?
- Will you spread paying off the balance over time?
Your answers to these questions will help you pinpoint the features you need. That might be a 0% introductory rate (or no fee) for balance transfers or a low interest rate if you’re looking to spread the cost over time. Or if you’re using the card abroad, the fees and exchange rate you will be charged could be a deciding factor.
» MORE: What credit cards are there and how do they work?
Consider your credit score
Credit card providers want to know you’re a safe bet to lend to. To help them find out, they will check your credit history and credit score when you apply for the card.
You can be as prepared as possible to help reduce your risk of an unsuccessful application because of your credit history. This includes not missing repayments on any other credit you have and staying within your credit limits.
You should also keep the number of credit card and other loan applications to a minimum (within a short space of time). That’s because when you apply for a credit card, it’s recorded on your credit file. To a lender, multiple applications for credit within a small period of time could suggest financial problems.
» MORE: What’s a good credit score?
Check your credit score
It’s a good idea to check your credit score with credit reference agencies or through an online platform before applying for a credit card. This can give you the chance to identify issues and take steps to improve it. There could be some easy wins, such as registering to vote or asking for errors to be corrected. You can check your credit score for free and it won’t affect your credit history.
If your credit score isn’t great, there are credit cards that can help rebuild a credit history. There are pros and cons to these, though. So think about how you plan to pay off the balance before going ahead, not least because these often come with higher interest rates.
» MORE: Tips for improving your credit score
Check you’re eligible to apply
The simplest check, which is important if you don’t want to be rejected right off the bat, is that you meet the card’s eligibility criteria. The card will also need to suit what you need it for.
Lenders’ basic criteria vary, and verification and credit checks play an important part. But generally, you’ll need to be:
- aged at least 18 or 21
- a UK resident with a permanent UK address
- earning a minimum monthly income
- not declared bankrupt or have any recent individual voluntary agreements (IVAs) or county court judgments (CCJs)
Use eligibility checkers
Before you apply, you can see how likely you are to get the credit card you want through a pre-application check. You may also be given an idea of the credit limit you could be offered and what other cards might be an option. So it’s a really useful step.
It’s a soft credit search by the provider or broker, and it’s easy to do it yourself online.
An eligibility check won’t have any impact on your credit score, won’t cost you anything, and other lenders won’t be able to see it.
This can help you save time in the long run, as you will only apply for a card that’s suited to you. You will also be able to keep applications targeted and to a minimum.
Compare costs
Once you have credit card deals to choose from, you can compare the key features and work out which one best suits your needs.
The following details are important to consider:
- Fees and charges: This includes the fee for going over your limit or paying late, using the card abroad, and for returned payments (when payment can’t be collected). There may also be an annual fee, and charges for making balance and money transfers.
- The interest rates charged on balance transfers, purchases and cash withdrawals.
- If there is an introductory interest-free (or low-interest) period and, if so, how long it lasts, and the rate you’ll pay after that.
- The minimum monthly repayment you must make.
- The annual percentage rate (APR), which is the total yearly cost of the credit card, taking fees and interest into account, if you don’t pay the total balance off each month.
Apply for the credit card
Once you’ve decided on the right card for you and completed an eligibility check, applying is simple enough. You can usually apply online, in a branch at a bank or building society, or by post.
Just follow the instructions to complete the forms the lender provides. You will need to supply basic financial and personal details, such as:
- address details for the last three years
- bank account details
- details of your income
- contact details, including email address and phone number
The provider will then run a credit check with a credit reference agency. Because it is a hard check, this will leave a mark on your credit history.
Know what comes next
Once you’ve applied, the lender will make a decision about your application. This can happen quickly, so it helps to know possible next steps, depending on which decision you get.
If your application is approved
The provider will send you a credit agreement if your application has been approved. Read the information carefully before you sign on the dotted line. Check that the details are correct, as well as the interest rate you’ll be charged, any fees, the credit limit, and the minimum monthly payment amount. If you don’t want to go ahead at this point, don’t sign the form and you can walk away without paying any fees.
Choose to sign the agreement and return it, and your credit card and PIN should arrive in the post, between seven and 14 working days later, though timescales can vary. If the provider needs more information from you, or if the checks are delayed, it will write to you, and the process may take slightly longer.
If you then change your mind and decide against getting the card, you have a 14-day cooling-off period once you’ve signed the agreement to tell the provider. You won’t be charged a penalty for cancellation and you don’t need to explain why. You may have to pay some other fees and costs, though.
If your application is declined
If the provider declines your application, you may be offered another credit card that it suggests is more suited to you. It may come with a higher rate of interest and lower borrowing amount, though, so be clear on the terms of the offer before going ahead with it.
If it’s a flat refusal, it could be for a number of reasons, including:
- Information that was on the credit report, such as missed payments or going over credit limits.
- Too many applications for credit or loans over a short period.
- A lack of credit history for lenders to be able to judge creditworthiness.
- Being financially linked to someone with a poor credit history.
- Not having a high enough annual income, or not being in your job for long enough.
- Errors on the application form.
It can be disappointing, but finding out why your application was rejected could help. The provider may tell you why when it contacts you, but you can also ask.
If it’s because of a poor credit score, you could find out which credit reference agency the provider uses. That way you can ask for a report from the agency and take steps to improve your score before making another application elsewhere.
Take a breath and don’t apply for other credit cards straight away, as you may have the same issue again and not know why. And again, a number of applications in a short space of time is best avoided as it may suggest to lenders that you are in financial difficulty.
Working on your credit score, using eligibility checks before applying and taking time to complete the forms correctly can help put you in a better position next time around.
Dive even deeper
What is a Credit Card?
If used correctly, a credit card can be a convenient way to borrow money to pay for goods and services. There are several different types available, including balance transfer cards and credit cards for bad credit, which is why it makes sense to shop around to find the one that’s right for you.
Ceri Roberts
3 Reasons to Cut Up Your Credit Card and 3 Reasons to Keep It
Cancelling your credit card may seem the obvious next step if you’ve managed to pay off your balance in full. But there are several factors you need to consider before deciding whether to get rid of your card, including the effect it could have on your credit history.
Rhiannon Philps
Stoozing: Free Cash or Debt Trap?
Stoozing is a way of using a 0% interest credit card to allow you to maximise the money you can make on your savings. But there are risks involved with this money hack, so is it worth trying?