Applying for a credit card: a guide
Applying for a credit card: a guide
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 making an application.
What is a credit score and how can I check my score?
If you’ve ever bought something on credit, or taken out a loan, then you’ll have a credit history. This information – in the form of a credit score – will be used by lenders to help them figure out if you should qualify for a particular credit card, loan or mortgage.
There are three main credit reference agencies that offer free credit score checks. They are: Equifax, Callcredit and Experian. Increasingly there are credit checking apps, such as ClearScore, which offer a similar service.
What should I consider before applying for a credit card?
Before applying for a credit card, you should ask yourself:
- What is a credit score and how can I check my score?
- How do I choose a credit card?
- What is ARP and what rate could I get?
- What should I do if my credit card application is declined?
- What’s the golden rule of credit card spending?
- Where can I compare credit cards?
How do I choose a credit card?
It’s a good idea to start by being clear on why you need a credit card in the first place. Do you have an existing debt on a credit card that you’re hoping to clear, or at least pay less interest on? If so, a card which offers 0% balance transfers could meet your needs.
Alternatively, if you’re hoping to spread the cost of a larger item (or items), then you might favour a credit card that offers 0% on Purchases or even both balance transfers and purchases. Or, it may be that you’d like to get rewarded for spending on your card. Rewards range from provider to provider: you could get cashback, air miles or club card points or many other types of benefit. Read about how a reward card could work for you.
What is APR and what rate could I get?
APR, or annual percentage rate (APR) is a calculation of how much interest you could be charged for borrowing over a 12 month period if you don’t pay it back. Broadly, the APR rate is 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. It’s important you understand the difference between personal and representative APR.
A personal rate of APR is what you will pay in interest on your borrowing. However, when you see the term ‘representative APR’ it means that 51% of successful applicants would get the advertised rate. So, if a credit card is described as having 22% representative APR, then 51% of people accepted have to get 22% APR, but the other 49% could be offered a different rate (and this will often be higher). Find out more in our guide to APR.
What should I do if my credit card application is declined?
If your application gets declined, don’t despair – but definitely don’t go and apply for lots 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 might have been declined before applying for another credit card.
If you have been turned down by a provider, they should be able to give you the main reason for doing so if you ask them. Therefore you should first contact the lender to ask them for clarification.
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. You should also be able to avoid spiralling fees which can result from late repayments.
Where can I compare credit cards?
Used carefully, a credit card can help with life’s little emergencies and what’s more – as goods and services costing over £100 and up to £30,000 are covered by Section 75 of the Consumer Credit Act – they can provide an extra layer of security when you spend.
Compare credit cards quickly and easily.