How to get your first credit card
By Ed Towner 06.02.12
If you're choosing a credit card for the first time, you may be unsure where to turn. Click here to find out some tips and advice on how to get a credit card and which ones are the best for you.
For many people a credit card is a handy piece of plastic to have in their wallets, but how do you actually get hold of one? If you have never had credit before, you may find it hard to get accepted for a credit card because you have yet to build up a credit history. With no credit history, lenders won't be able to see how responsible you are when it comes to paying back debt and will therefore be reluctant to lend to you.
But that doesn't mean there are no options at all and once you do get hold of a credit card, you can start to build up your credit history, meaning you have more chance of being accepted for more competitive deals later on. You can even ask your original card company to lower your interest rate once they have had a chance to see you can handle borrowing correctly. Building a good credit record is also important for any future credit applications you might make, such as for a mortgage or a personal loan.
Check your credit rating
You can check how your credit rating is looking by signing up to a 30-day free trial with Experian or Equifax – just be sure to cancel it once the free period is up to avoid being charged. Alternatively, you can get a £2 statutory credit report from Experian, Equifax or Callcredit.
If you're concerned your credit rating might not be up to scratch, a good first step to improving it is to register on the electoral roll; this provides proof of a permanent address which is something credit companies look for. It will also help you if you have remained in the same job for a number of years as this will show you have a stable income. If you don't yet have a current account, it's well worth applying for one as this will help you to establish a relationship with your bank. Once you've done so, you may even be offered an overdraft facility which will mean you can start to build up a credit history – just make sure you stick to your overdraft limit.
Choosing your card
When it comes to applying for a credit card, you need to think about which type of credit card you actually need. For example, a 0% balance transfer card wouldn't be much use as you have no debt to transfer. In contrast, a 0% purchases credit card or cashback card could be very useful when spending. But you have to be realistic as chances are, if you're credit rating isn't top-notch, you're unlikely to be accepted for these competitive deals.
So what else can you do? You could try talking to your current bank as if you have been with them for a number of years, they may be more willing to lend to you – although this is by no means guaranteed. Moneysupermarket.com also offers a good starting place to find which cards will best suit you and your credit situation. Simply fill out a quick form and it will suggest a list of credit cards which may be available to you.
There are a number of credit cards on the market that are targeted towards those who have no credit history or a poor credit rating. The drawback to them is that the interest rates are very high and the credit limit will be low, but as you continue to pay off your bills and build up your bank's trust you may be offered a different type of card with more rewards and better rates. Be warned though, with these cards you must pay off your balance in full every month to ensure you won't be charged interest. Also make sure you don't miss any payments as this will negatively impact your credit rating. It's well worth setting up a direct debit to ensure you remember to make your payment each month.
To give you an idea about what's on offer, here are some of the credit cards you could consider:
| Purchases | Balance Transfer | Cash Advance (annual) | Representative APR | Other Information |
Capital One Progress | 29.9% | 29.9% 3% fee | 29.9% 3% fee (min £3) | 29.9% APR (variable) | An interest free period of up to 56 days. A credit limit from £200. Minimum monthly repayment of £5 or 1% plus interest and fees. |
34.9% | 34.9% 3% fee | 34.9% 3% fee (min £3) | 34.9% APR (variable) | An interest free period of up to 56 days. A credit limit from £200. Minimum monthly repayment of £5 or 1% plus interest and fees. | |
29.8% | - | 39.8% 3% fee (min £3) | 29.8% APR (variable) | An interest free period of up to 56 days. A credit limit from £250. Minimum monthly repayment of £5 or 3.5% plus interest and fees. | |
granite Credit Card | 34.9% | - | 44.9% 3% fee (min £3) | 34.9% APR (variable) | An interest free period of up to 56 days. A credit limit from £150. Minimum monthly repayment of £10 or 3.5% plus interest and fees. |
39.9% | - | 49.9% 3% fee (min £3) | 39.9% APR (variable) | An interest free period of up to 56 days. A credit limit from £150. Minimum monthly repayment of £5 or 3.5% plus interest and fees. |
Be aware that you should not make multiple applications. If you apply for a credit card and get turned down, don't continue to apply to several different lenders. Each time you apply, your credit rating is checked, leaving a footprint behind. If there are too many footprints in a short period of time, this will work against you as lenders may think you're overstretching yourself.
Store cards
Finally, although here at creditcards.co.uk we're not generally fans of store cards, if you're still having no luck getting hold of a credit card, store cards can be a good way of starting out and building up some form of credit history. You'll find you often get offered these in shops when you go to pay and they usually come hand in hand with some form of discount on your first purchase – to entice you in. But if you are going to take one out, be warned that interest rates are high so you need to ensure you pay off your balance in full every single month. You should also watch out for dormancy fees if you don't use your card for a period of six months and charges for being in credit. You can read more about this in The dangers of using a store card.
