How to apply for a credit card

Being sure you can meet the repayments on a credit card is the first step to getting a card that works for you. Here’s everything you need to know before applying for a credit card online, and what to do if your application is denied.

Being sure you can meet the repayments on a credit card is the first step to getting a card that works for you. Here’s everything you need to know before applying for a credit card online, and what to do if your application is denied.

Rob Silvey
Money expert
11
minute read
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Posted 13 JANUARY 2020 Last Updated 20 APRIL 2022

How do credit cards work?

A credit card lets you make purchases by borrowing from a credit card provider, typically up to a pre-set limit. If you pay off the balance on your credit card statement in full each month, you won’t pay interest on the amount you’ve borrowed. But if you only make a partial or minimum payment, you’ll be charged interest. How much will depend on the deal you have with your provider.

Using a credit card responsibly allows you to build a positive credit score. But if you miss payments or fall into debt, this will have a negative impact on your credit score – which could affect your future chances of borrowing.

To find out more, read our guide to credit cards.

What should I consider before applying for a credit card?

Before you apply for a credit card, ask yourself the following questions to make sure it’s the right option for you:

  • Can I manage a credit card? Credit cards can be handy, but you’ll need to resist the temptation to spend more than you can afford.
  • What is my credit score? If you’ve ever bought something on credit or taken out a loan, you’ll have a credit history. This information – in the form of a credit score – will affect what credit cards you’ll be offered, including how much you’ll be able to borrow and the interest rate you’ll be charged.
  • Can I meet the minimum repayments? You’ll need to be confident you can make at least the minimum repayments on your card to avoid negatively affecting your credit score and being hit with penalty fees.
  • Will I get the advertised interest rate? When you see a ‘representative APR’ advertised by a lender, it means this must be offered to at least 51% of applicants. But the other 49% could end up with a higher rate. The actual interest rate you’re offered will depend on your financial situation.
  • What rewards can I get for using the credit card? If you want a bonus every time you spend, you might prefer a cashback card or a rewards card. Interest rates can be high on these, though, so they may only be worthwhile if you can pay off your balance in full each month.

How do I choose what credit card is best for me?

The type of card you choose will depend on what you want to use it for.

Spreading the cost of a large item or items

A card that offers 0% on purchases could be suitable, provided you can pay the balance within the 0% period.

Advantages of a 0% purchase credit card:

  • Great way to spread the cost of large purchases
  • No interest to pay for an agreed period
  • Could protect purchases between £100-£30,000 through Section 75 of the Consumer Credit Act, though there are no guarantees.

Disadvantages of a 0% purchase credit card:

  • The 0% purchase period does expire
  • Could impact your credit score if you make too many applications in a short period of time
  • Comes with a credit limit.

Find out more about 0% purchase credit cards here.

Clearing debts 

If you want to clear or consolidate debts on other cards, or reduce the interest you’re paying, explore cards that offer 0% on balance transfers. There may be a fee to pay for transferring your balance, as well as a monthly or annual fee, so you’ll need to factor these into any savings you might hope to make.

Advantages of a 0% balance transfer credit card:

  • Can consolidate existing debt into one card
  • Transfer existing debt with high interest to a 0% interest plan
  • No interest to pay for up to two years or more.

Disadvantages of a 0% balance transfer credit card:

  • Comes with a balance transfer limit
  • Could impact your credit score if you make too many applications in a short period of time
  • 0% period does expire.

Find out more about 0% balance transfer credit cards here.

Building your credit record

Credit building cards can be used to repair your credit score if you have bad credit or to start building a credit history.

Advantages of a credit building card:

  • It’s easier to pass a credit check to get one
  • Can prevent you from getting into debt
  • Can be used to improve your credit score.

Disadvantages of a credit building card:

  • Often charge higher interest rates
  • May come with extra fees.

Find out more about credit building cards here.

Getting rewarded for using your card

Rewards cards can give you cashback, air miles, or points or vouchers to spend in stores. Ideally, you’ll need to pay back what you owe in full every month, otherwise interest charges might outweigh your rewards.

Advantages of a rewards credit card:

  • Earn rewards simply by spending
  • Rewards available from a wide range of brands
  • Rewards include cashback, vouchers and air miles.

Disadvantages of a rewards credit card:

  • Encourages you to spend more
  • May come with extra fees.

Find out more about reward credit cards here.

Students

Living on a student budget can often be difficult, so student credit cards are a useful way of managing your money when you really need it. They can help you from slipping into expensive debt and finance any important purchases.

Advantages of a student credit card:

  • Can help you manage on a tight student budget
  • Good way to build your credit score
  • Can earn rewards or cashback for spending.

Disadvantages of a student credit card:

  • Often charge higher interest rates
  • Low credit limits.

Find out more about student credit cards here.

What do I need to check before I apply for a credit card?

Firstly, it’s worth checking your credit score to make sure there aren’t any errors that could affect your chances of borrowing. There are three main credit reference agencies that offer free credit checks – they are Experian, Equifax and TransUnion.

Applying for cards has an impact on your credit file, so it makes sense to see if you’re likely to be eligible for a card before you apply. Use our online eligibility checker to get an idea of whether you’re likely to be accepted for the cards you have in mind.

Once you’ve narrowed down your search, look at the APR offered by the cards you’re interested in. APR (annual percentage rate) is a calculation of how much interest you could be charged for borrowing over a 12-month period if you don’t pay the amount back. It’s a useful way to gauge how competitive a credit card is. It’ll take into account interest and any other standard fees and charges. The rate you could get will vary from provider to provider.

Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.

What information will I need to fill in my credit card application form?

When you apply for a credit card, the lender will usually ask you for your:

  • Current UK address (plus previous addresses for the past three years)
  • Email address and phone number
  • Gross annual income
  • Bank account number and sort code.

Applying online will usually mean less paperwork, as the lender will verify your ID and address electronically via a credit reference agency. To complete this process, you might need to answer a few important questions only you would know the answer to. The lender may also ask you for information about your monthly outgoings, to find out whether you can afford to take on any new debt.

In some cases, you may need to provide more proof of ID. So, you may have to head to your nearest branch with your ID or post a certified copy to the lender.

How do I apply for a credit card?

Applying for a credit card online should be a relatively straightforward process. Follow these simple steps to find the right card for you:

  • Choose which type of card you want: you’ll normally be asked what you’ll use your new credit card for when you apply. For example, do you want a 0% purchase card so you can spread the cost of a big-ticket item? Or are you looking for a credit building card to help improve your credit score?
  • Provide your personal details: you’ll be asked for information including your salary and other household income. This is because lenders want to see evidence that you’ll be able to pay back what you owe.
  • Find out if you’re eligible: it’s best to find out your chances of being accepted for a card before you make a formal application. When you compare credit cards with us, we’ll do a soft search that won’t show up on your credit record. Some cards now give 100% pre-approval, which means you’ll definitely be accepted as long as you pass fraud checks and the information you’ve supplied is correct.
  • Choose a card: once you’ve found a deal and interest rate that you think could work for you, the next step is to click through to the lender’s website to make a formal application.
  • Wait for your card to arrive: if you’re accepted, you can expect to receive your new credit card within 10 working days.

What will impact my eligibility of being accepted for a credit card?

Being approved for credit depends on whether you meet the lender’s eligibility criteria. This will usually involve a range of factors, including:

  • Your age – you’ll need to be at least 18 years old to qualify for a credit card.
  • How much you earn – you’ll need to be employed with a regular annual income, usually earning at least £3,000 a year.
  • Your financial history – most lenders will ask that you haven’t been declared bankrupt and you haven’t had any individual voluntary agreements (IVAs) or county court judgments (CCJs) against you in the past six years.
  • Your credit score – lenders will look at your credit history to weigh up how likely you are to make your repayments on time, based on your track record of handling credit. Having a low credit score or no history of borrowing might affect your eligibility.

If you’ve never applied for a credit card before, a credit builder card can be a good option to get you started.

Where can I compare credit cards?

Right here at Compare the Market, we’ll help you compare credit cards quickly and easily today.

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Frequently asked questions

How do credit card companies make a decision?

First and foremost, you’ll need to meet the credit card provider’s minimum eligibility requirements for your application to be approved. The provider will also base their decision on your credit score, your income and your ability to afford repayments.

What should I do if my credit card application is declined?

If your application gets declined, don’t despair – and definitely don’t go and apply for more cards. Having multiple credit card applications, especially in a short period, could dent your credit score because providers might view it as high-risk behaviour. So, it’s best to work out why you may have been declined before applying for another credit card.
If you’ve been turned down by a provider, they should be able to give you the main reason for doing so if you ask them.

What credit cards can I get with bad credit?

It depends on your personal financial situation, and how bad your credit is. Credit building cards are specifically designed for those with bad credit. This means, no matter how bad your credit score may be, you could still be eligible. Although you’ll be offered a low credit limit and a higher APR than other credit card deals, these types of cards are a good place to start to build your credit score up and then potentially be eligible for better cards in the future.

How can I check if I’m eligible for a credit card for poor credit?

Using our online eligibility checker, we can help you get an idea of the sorts of credit cards you could be eligible for. Just enter a few details and we’ll run a simple soft credit check on you. This won’t affect your credit score in any way, but it’ll allow us to find your potential options, before you go and make an application.

What’s the golden rule of credit card spending?

When it comes to using your credit card, it’s always a good idea to pay off your card in full and on time every month – or, at the very least, meet the minimum payment. By doing so, you can stay on top of your borrowing while building up your credit rating. Bear in mind, though, that if you only make the minimum repayment it’ll take longer to pay off your debt and you may end up paying more in interest.

If you don’t make at least the minimum payment, your credit rating is likely to take a knock, which could impact your ability to get credit in the future. Plus, late or missed payments can lead to spiralling fees.

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