If you’re thinking of taking the plunge and opening a fresh line of credit, you need to know how to apply for a credit card. Here, we outline the steps you need to take to find the ideal card for your needs and boost your chances of acceptance.
The first thing to do is decide what type of credit card you need, which all depends on how you’re going to use it and why. For example, are you looking for a card to cover your everyday spending that you’ll pay off every month? In that case you’ll want to look for a cashback or reward credit card to make your spending really worthwhile. Alternatively, perhaps you’re looking to make a big purchase and want to spread the cost without incurring interest? That’s where the best 0% purchase credit card can come in. Read our complete guide to credit cards to get a more detailed overview of your options.
The next step – and one of the most crucial – is to check your credit score, as this has the power to determine whether or not you’ll be accepted for a credit card when you apply. This is because a lender will scrutinise your score when considering your application, with it seen as a key determiner of your ability to both manage credit and repay the debt. Essentially, the higher your credit score, the more likely you are to be accepted as you’ll be viewed as a lower credit risk, but conversely, a low credit score can make approval more difficult. A poor credit score doesn’t necessarily mean an instant refusal, but it certainly limits the number of cards you’ll be eligible for, and it rules out the very best interest rates and deals. This is because lenders will feel they’re taking on more risk by lending you money as a lower score indicates there’s less of a guarantee that you’ll be able to manage it effectively; this means that, if your score is less than stellar, it’s vital to work on improving it before you apply. See our guide on how to improve your credit score to get started.
Once you know the kind of card you need and whether or not your credit score is up to scratch, it’s time to see what’s out there. Comparing credit card deals can give you a great idea of the options available, and our charts are the perfect place to get started. Our overview of the best credit cards covers 0% purchase and balance transfer deals, cashback and reward cards, travel cards and even credit builder deals, letting you sort the results according to your needs and allowing you to compare individual features (such as introductory interest-free periods, APRs and rewards) to narrow down the options.
Found a credit card to suit? The next step is to check your eligibility. Luckily most credit card providers have an eligibility checker on their website, which involves them performing a ‘soft search’ on your credit history (which, crucially, won’t impact your credit score) to determine the likelihood of you being accepted for the deal. Bear in mind that you may not be offered the exact deal advertised – lenders are only obliged to offer advertised rates to 51% of applicants, which is why it’s so important to make sure your credit score is the best it can be before you apply.
If everything seems in order and you’re confident in being accepted for the deal, it’s time to apply. Again, most credit card providers have an easy online application process for this, in which you’ll typically be asked to fill in a form containing all relevant personal and financial details. You may be shown the decision there and then, or you may be asked to provide additional information, which can mean it’ll take a little longer. The exact process will always vary depending on the lender, but if you’re approved, you should receive your brand new credit card in a matter of days.
If you’ve never borrowed money before, you won’t have a credit score, which can make it more difficult to be approved as lenders won’t know if you’re a credit risk or not. This means you may not be eligible for standard credit card deals, but this is where credit builder cards come in. They typically have higher interest rates and lower credit limits than standard cards, but they can be a great way to build your credit score and boost your chances of securing a better deal in the future.
The same rules apply as above – if you’ve got a bad credit score you won’t be eligible for the best deals, which means you should stick to applying for credit builder cards. However, you may want to avoid applying altogether for the time being, and spend the time working on your credit score instead.
If you’re approaching retirement or are already in your postwork years, you may find it a little more difficult to be accepted for a credit card. You’ll need to show the lender that your retirement income is sufficient to make the necessary repayments and that you fulfil all other lending criteria, but be prepared for the fact that, as you’ll likely have a lower income than someone in full employment, you may not be eligible for the best deals or highest credit limits.
This is another scenario where you’re likely to have a variable income, and so you may find that you’re offered slightly different terms than you were expecting. It’s important to make sure that your finances are in great shape before you apply, and this is where a strong credit history can pay dividends.
Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.