How to get a credit card

Assessing your eligibility

To be eligible for a credit card, you need to be 18 or over and living in the UK.

Some credit cards may have other requirements. For example, you may need to earn above a certain amount, or be aged 21 or over. Credit card providers will also look at your credit score when assessing your eligibility.

To see if your application is likely to be accepted, it’s a good idea to use a credit card eligibility checker. This won’t affect your credit score.

Importance of credit score

Your credit score is an important piece of information that lenders look at when assessing credit card applications.

A credit score – also known as credit rating ­– helps lenders work out how reliable you are at paying back money that you borrow. Your credit score could be the reason between being accepted or declined by a lender. It can also affect the interest rate you are offered.

It’s useful to check your credit report before applying for a credit card. You’ll be able to look for any mistakes and correct them, plus you can make sure the information the credit reference agencies have is accurate.

The three main agencies are Experian, Equifax and TransUnion. There may be steps you can take to improve your credit rating.

Other eligibility criteria

The eligibility criteria used in assessing applications depends on the credit card issuer. Here’s a list of common criteria that a lender may assess you against:

• Age (such as 18 or over, or 21 or over)
• UK resident
• Have a regular income (and therefore not unemployed or a student)
• Have a minimum income (such as £7,500 a year)
• No county court judgements (CCJs), individual voluntary agreements (IVAs) or bankruptcies
• Not been declined for a credit card with the lender recently

Note that this is not an exhaustive list – lenders may use other criteria. And they may not apply all of the factors in the above list. It depends on the credit card you are applying for.

It is possible to get a credit card if you’re unemployed, on a low income or have a poor credit history. But it’s unlikely you’ll qualify for the best deals.

First-time applicants

If this is the first time you’ve applied for a credit card, you could be at an advantage. If you have a high credit score, regular income and haven’t missed credit card payments (because you’ve never had a credit card before), your application could be accepted.

However, first-time applicants can also be at a disadvantage. The number of credit card options to choose from, plus baffling jargon, can be overwhelming. You may also have a low credit score if you’ve never borrowed money before.

Choosing the right credit card

With hundreds of credit cards available, it can be tricky working out which one is right for you. Ask yourself what you need the credit card for. This could be to buy an expensive item, such as a new fridge, to pay for a holiday or to pay your bills.

Then you need to look at your financial situation and your money goals. Will you be able to pay off the balance in full and on time each month? If so, the interest rate may not be so important and you can look at cards with other perks such as cashback.

If you want to spend money on the card and won’t be paying off the balance in full each month, you will usually have to pay interest. In this case, you may want to choose a card with a lower interest rate. Don’t forget to make sure you can afford to meet the minimum repayments.

If you have debts on other credit cards, it’s possible to take out a “balance transfer” credit card and move those debts onto the new card. More on this later.

Comparing interest rates and fees

When comparing credit cards, look closely at the interest rates and fees. There may be an introductory interest rate, followed by a different rate. This is where you start off paying a low rate of interest or none at all. The rate then rises after a period of time, such as six months.

Check what fees you may have to pay. Some providers charge an annual fee. Most will charge for late or missed payments, going over your credit limit and for withdrawing cash at an ATM (known as a “cash advance”).

If this is starting to sound confusing, don’t worry. There is a handy way to compare credit cards, and that’s by looking at the representative annual percentage rate (APR). This is the total annual cost of the card if you don’t pay the whole balance off each month. It includes both interest and fees. Comparing the representative APR for different cards will help you find the cheapest one.

Note that not everyone who applies gets the advertised APR. Some providers offer the APR to most but not all cardholders – so you may not get the rate you expect.

Benefits and rewards

Some credit cards offer benefits and rewards, such as loyalty points, air miles or cashback. The more money you spend, the more rewards you earn. Loyalty points can often be spent with a particular supermarket or retailer, while cashback is where you get money refunded to your card.

Check the small print to see if you qualify for any perks. It may be that you’re only eligible if you pay your balance in full each month.

Balance transfer cards vs. purchase cards

Balance transfer cards allow you to move the balance from an old credit card onto a new credit card. The new “balance transfer” card will not charge any interest for a fixed period. So, it might say “0% for 10 months”. These cards usually charge a fee to make a transfer.

Purchase cards are best for spending money. A 0% purchase card won’t charge any interest on your shopping for a fixed period, so you have more time to pay the balance without being charged.

Credit card application process

You’ll need to fill in an application to apply for a credit card. Be as honest as possible and check it over before submitting it to make sure there are no mistakes.

Remember to read the terms and conditions before you start applying.

Documentation required

Here’s a list of information and documents you may need to apply for a credit card:

1. Your name and date of birth
2. Your UK home address
3. Your email address and phone number
4. Any previous address(es) from the past two years
5. Your bank account number and sort code
6. Your employment status and income
7. Any dependents and extra household income
8. Details of any credit cards you’re transferring balances from (if you are)
9. Document to prove identity, such as photocard driving licence, bank statement, utility or council tax bill, council tenancy agreement or rent card.

Applying online vs in-person

You can usually fill in a credit card application online, over the phone, by post or in person at a bank or building society branch. Online applications tend to be the quickest option.

What to do if you're declined

If your application has been declined, try not to worry. There are a number of reasons why this may have happened. Perhaps your credit score is low or you’ve made lots of credit applications in a short space of time.

Avoid rushing to apply for another credit card, as this could signal to lenders that you're in financial difficulty and harm your credit rating.

It's advised that you wait at least three months before reapplying.

How long does it take to get a credit card?

Once you've been approved for a credit card, you can usually expect your new card to arrive within two weeks. The card and PIN are sent separately by post.

Can you get a credit card with bad credit?

You can get a credit card if you have bad credit. It may also be possible to get a credit card if you have no credit history. However, you will be limited in your choice of card. Credit builder cards are designed for people in this situation. They typically have low borrowing limits and high interest rates, which reduces the risk to the lender.

Used responsibly, credit builder cards can help you improve your credit score over time.

Managing your new credit card responsibly

Follow our dos and don’ts to manage your new credit card responsibly:

Keeping within your credit limit

It’s important to keep within your credit limit, or you could incur a fee. You may also damage your credit score.

It’s a good idea to keep your credit utilisation ratio low, as this is viewed positively by lenders and could boost your credit rating. This ratio refers to the amount of credit you've used in relation to how much you have available. It’s generally advisable to keep your credit utilisation ratio at 25% or lower.

Making payments on time

It’s vital to make payments on time. Miss a payment and you could be slapped with a fee, typically around £12. If a late payment is recorded on your credit report, it will stay there for six years, potentially harming your chances of being accepted for other financial products in future.

Avoiding unnecessary charges

Read the small print when you take out the credit card so you don’t get caught by extra charges. These could be for late payments, ATM withdrawals, going over your credit limit and using your card abroad.

Tips for first-time applicants

If you’re planning to get a credit card for the first time, think carefully about what you need it for. A debit card or loan could be a better option. Consider what type of credit card is best for you.

Take some time to understand how credit cards work and use an eligibility checker first to see if you’re likely to be accepted. Don’t rush the application – and remember to read the small print.

Common mistakes to avoid

Here are some common mistakes to avoid when using a credit card. All of these could lead to financial difficulty and possibly harm your credit score.

1, Not making the minimum payment on time

2, Exceeding the spending limit

3, Overspending to get more rewards or cashback

4, Not having a plan to pay off the balance

5, Applying for too many credit cards in a short space of time

Summary: How to get a credit card

Credit cards can give you financial freedom, but they also need to be managed responsibly. Remember the golden rule: always pay off at least the minimum payment on time every month.