Want to add a credit card to your wallet to use in emergencies, get better buyer protection or spread the cost of pricey purchases?
Whatever the reason - if you’ve never borrowed before, applying for your first credit card may seem daunting.
But there’s no need to worry. Here’s what to expect:
What to consider when applying?
When you apply for any type of credit, whether it’s a credit card, loan or mortgage, lenders will check your credit history to make sure they’re lending to a responsible borrower.
They’ll review all your borrowing activity over the last six years or so by accessing your credit history using one of three credit reference agencies - Experian, CallCredit and Equifax.
As you can imagine, your credit history has quite an influence on whether you’ll be accepted for the card and rate you’ve applied for. This is why you should check all the information on your record is correct and up to date before you apply for a credit card. After all, any errors could delay your application.
Don’t make the mistake of thinking your credit history is perfect because you’ve never borrowed before. Having a limited history of borrowing can also put lenders off as they have nothing to go on.
Choosing your card
There are many types of credit card available. Depending on your reason for applying, you should weigh up the options and shop around.
By doing this you can be sure you’ll benefit from the credit card you apply for. Some cards, for example, offer 0% interest introductory periods, while others may offer cashback and rewards on specific purchases.
But these promotions are typically only offered to customers who have shown themselves to be responsible borrowers in the past. If you’ve never borrowed or have had difficulties managing credit, you may struggle to be accepted for these types of cards.
Don’t panic, though – there are credit card providers that specialise in lending to people with little or negative credit histories, like Ocean.
Before you apply for a credit card, use a soft search tool to check your eligibility. This gives you the freedom to check what you’re likely to be accepted for based on your borrowing record, without it leaving a footprint on your credit history.
Each time you apply for credit, whether accepted or rejected, it’s noted on your credit history. Applying for a number of credit cards at one time can give lenders the impression that you’re desperate to borrow, which can put them off lending to you. A rejected application can be negative for your credit history.
Credit checking sites such as Noddle, ClearScore and CreditMatcher, all offer a soft search tool. They will match you to credit cards that you’re likely be accepted for based on your current credit history. This lets you shop around to make sure you’re getting the best deal.
Here at Ocean, we have QuickCheck. This allows you to see whether you’ll be accepted for our credit card before applying, and it won’t leave a mark on your credit history.
Why do you want the card?
When used responsibly, a credit card can offer great benefits. It allows you to spread the cost of purchases over several months, and purchases worth over £100 are insured under Section 75. You can find out more about this extra cover here.
Keeping up with your repayments and making at least the minimum payment each month will positively impact on your credit history. If you fail to do this, your credit history will be affected and you’re likely to incur charges.
Only making your minimum payment each month means the interest will quickly mount up, and it could take you longer to pay off your balance. You should aim to clear the full balance as quickly as possible to avoid paying interest for longer, so always pay as much as you can towards your credit card.
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Apply with confidence
Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.