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Where to buy - How to qualify

Want a great Credit Card? Find out why these 4 Cards are probably the best on the market. So much so we use 3 of them ourselves. More information.
Credit Cards are easily available from all the banks and building societies, as well as the individual Credit Card companies. Most accounts can also be opened and run online - See How to be safe with online banking is 3 easy steps.

The opening process is simple and when applying online you normally get an instant yes/no decision, however -

  • The initial application form (either online or via the post) is only part of the process
  • Further paperwork has to be sent for your signature and approval
  • The Card will then arrive normally within 10 days of first applying
How to Qualify
Qualifying for a credit card gets easier as each year passes.

A good example of this is with Gold Cards. When they were first introduced, about 15 years ago, they were exclusive, strictly reserved for high earners. But now anyone who earns slightly over the minimum wage (around £26k) will probably qualify.

As long as you have a regular job or income, and your credit rating is not toxic (many late payments and/or Defaults/CCJs), you should have no problem being accepted.

Qualifying - What the banks and Card providers look at
1. Your Credit Rating
This is by far the most important factor. Almost everyone in the country has a credit rating which is provided by two credit rating companies, Experian and Equifax.

These firms collate your financial history. They hold details of all your present credit agreements including payment history, amount borrowed and amount owed. This information is used to build a risk profile which decides whether or not you qualify for a card and the amount of your credit limit.

How to get a good credit rating

  • A good history of paying your bills on time
  • How much debt you currently have outstanding
  • How much credit you're not using (you might have a Credit Card with a £5,000 balance which has a balance of only £200 so only 4% of your available credit is being utilised)
  • How long you've lived at your present address - the longer the better as that promotes stability
  • Whether you're on the Electoral role - again this promotes stability

How to get a bad credit rating

A bad credit rating is based on the complete opposite of above, plus whether you've got any defaults or CCJs over the last 6 months.

A Default is where you owe money on a credit agreement (loan, mortgage, credit card, even mobile phone contract) and fail to pay after several months. A CCJ, or County Court Judgment is similar; you owed money, didn't pay and got taken to court.

Factors such as late payments or whether you are on the Electoral role can easily be remedied. But defaults and CCJs stay on your file for 6 years. People with these negative entries on their Credit File will struggle to get decent amounts of credit at affordable interest rates.

Sadly, most people don't realise the power the credit reporting agencies. Put simply they are the most powerful financial organisations affecting all of our lives.

2. Salary & Occupation
When applying for a card your salary will get considered and to a lesser extent your type of job.

Someone being paid the average UK wage of around £26,000 can probably expect to be offered a credit limit of between £1,000 and £2,000.

3. Your banking details
As a general rule of thumb it's easier to get a credit card from your own bank than from another bank. This is because your bank not only knows you but will have built up a detailed financial analysis of how you run your account(s).

For example, it will know what money comes into the account monthly and what goes out. This is useful information because offering credit is all about risk management - how much can this person be lent and what chance have they of paying it back.

It's also a good idea to have a credit card issued from your own bank as online banking becomes even more efficient. I bank with Natwest and my main credit card is also issued by them and when I log online all my accounts can be managed through the one screen. See How to be safe with online banking is 3 easy steps.

Also See Secret 4 - The internet - 4 reasons why it's your financial friend - which is one of this site's 10 Secrets to Good Personal Finance.

See also

FREE Report

How to Audit your Credit File

With errors your rating will suffer
How a clean credit rating can save you money
4 steps to a clean up any mistakes
Don't discount the importance of your credit file
It's absolutely critical.....
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