June 14, 2006

By Peter Kenny

Anyone applying for his or her first ever credit card can find the whole process quite daunting.

The major hurdle many first time applicants face is the fact they have never had any type of credit before. This may seem strange, however, credit card companies run a credit report on the applicant and sometimes it is difficult for them to make a decision based on a report with no history. Credit card companies “trust” people who have a track record of repaying any credit they have had in the past.

Credit report – check it first

Applying for a credit report is easy and gives valuable information on an applicant’s credit rating. By checking their credit report, applicants will be able to find out if they have any problems with credit or if there are any errors, which can be rectified. If a persons credit rating is good there should not be any problems when applying for a credit card.

First port of call – your bank

Only when the credit report has established that there are no problems should anyone apply for a credit card. By going to their bank, applicants could find it easier being accepted for their credit card application. If an applicant is in full time employment and has a history of their wages being paid into their bank account, they should be able to get a credit card. They may have to start off with a credit limit of only a few hundred pounds, however, if repayments are met on time their credit rating should get better and in time they should be able to apply and be accepted for a credit card with a higher credit limit.

Store cards

If someone finds they have been refused in their credit card application to their bank they could consider applying for a store card. Store cards have notoriously high interest rates (APR) and are not recommended if the balance is not repaid in full every month, in other words no interest is paid. A person with no credit history has a fair chance of being accepted for a store card. This would give them the opportunity to build their credit rating by making sure all their bills are paid on time. This option should only be pursued if the credit card balance is repaid in full each month.

Be selective in applications – do not “over apply”

By applying for too many credit cards at the same time can result in an applicants credit rating being weakened. Every time any type of credit is applied for the applicants credit report is updated. Too many applications can make a person look financially unstable. This may result in a credit card application being refused. This can also apply to

Try a secured card

Actually by using a secured card could be the easiest way to build up a good credit rating. Although a deposit is required, by showing that their bills are repaid on time an applicant will soon be able to apply for a better credit card.

If a credit card application is refused it is perfectly acceptable to ask the reasons why. The reason could be that a credit report was not up to scratch or even the application form was completed incorrectly. Armed with this information it should make applying for the next credit card easier.

Please find below details on how to obtain a credit report:

Equifax
Credit File Advice Centre
PO Box 1140
Bradford
BD1 5US
Tel: 08705 143700

Experian Ltd
Consumer Help Service
PO Box 8000
NOTTINGHAM
NG1 5GX
Tel: 0870 241 6212