Skip to main content

Guide to getting your first credit card

Despite the credit crunch, the UK major credit card issuers have a selection of offers, such as extended balance transfers and cashback rewards. The deals on the UK market suggest that it is relatively easy for UK consumers to get a credit card, dependent on various factors.

The vast majority of these deals are only available to people with excellent credit scores, leaving most first-time applicants unable to get a card. Without any credit history, or a poor score, getting a credit card can be difficult.

First-time consumers may find themselves in a cycle where it is tough to obtain credit with a low credit score, but without UK lenders willing to offer credit, it is also difficult for them to improve their financial standing.

Boosting Your Credit Score

Although the main way to improve a credit rating is to demonstrate good borrowing behaviour, it is not the only way. Individuals who are unable to get access to credit need to do a few simple things to tip the scales in their favour. For example, registering on the electoral roll and staying at the same address for a long time can have a beneficial impact on obtaining a card.

Other possibilities are obtaining other forms of credit, such as mobile phone contracts or house insurance, by paying for these expenses on a monthly basis consumers are entering into a credit agreement. While they might not have the same impact on credit scores as a loan or credit card, it is a positive place to start before moving on to the next step. It also shows that you are able to make consistent payments.

Consumers that have an application rejected should stop applying. If too many applications are registered in a short space of time, it will have a detrimental effect on the credit score, as it suggests desperation for additional funds. Wait at least a month, but ideally six months, before making another credit card application – in the meantime improving the credit rating can help.

Credit-builder cards

Due to the difficulty for some consumers in obtaining a credit card since the downturn, there has been an influx of cards designed specifically for people with poor credit scores. There is still a credit check, so approval is not guaranteed, but they are much easier to get accepted.

Credit scores are determined by a consumer's borrowing behaviour and how reliable that individual is. As such, credit-builder cards tend to have much higher interest rates, lower credit limits and rarely offer the standard 60-day interest free grace period.

Due to the nature of these credit cards, it is even more important that they are used effectively, otherwise debts could start to increase quickly and credit scores could end up going in the wrong direction. To reap the benefit of using a credit-builder card, cardholders should use the card as alternative payment method and repay the bill immediately, avoiding any interest.

After six to 12 months of continuous use, cardholders should see a marked improvement in their credit score. This may then allow them to apply for a standard card, although at this point it is still best to avoid the market-leaders.

What You Need to Get Your First Credit Card

In order to apply for a credit card, consumers will need to have personal details to hand, including name, date of birth and contact information. A complete address history is also required, not just the present address, but a record of all addresses in the past three to five years.

Credit card applicants will be expected to hold a job before being accepted, therefore they will need to provide an employer name, their position, salary and how long they've been in the role. Details of any bank or savings accounts are also required, and finally a signature - electronic, handwritten or oral.

Once UK consumers have managed to land their first credit card, it opens up possibilities for improving their financial standing. Over time they will start to see their score improving, providing them with more chance to obtain overdrafts, loans, a mortgage, improved interest rates and cheaper shopping.