There are dozens of lenders in the UK who offer credit cards to customers. Despite all being regulated by the Financial Conduct Authority (FCA), each lender has a unique product portfolio based on the customers they target.
If you are looking for a credit card, there are lots of them out there depending on what your needs are. For instance, you can go for 0% balance transfer cards if you want help with your debt, secured credit card to help you improve your credit history, 0% purchase card for large purchases and so forth.
Typically, you need to be 18 years of age, living in the UK, employed, and earning at least £7,500 per year to qualify for a credit card. However, meeting these requirements doesn’t give you an outright ticket to getting approved for a credit card. To enhance your chances, here are some additional tips.
1. Go Through Your Credit Report
When you make an application for a credit card, the lender will not only look at the accuracy and strength of your application but also your credit report. Based on your past credit behaviour, the lender will assess as to whether you are a low or high-risk borrower.
Looking at your credit report beforehand enables you to spot any inaccuracies and inconsistencies, gives you a much better understanding of your finances, and highlights the areas that could be hurting your score.
You can get your credit checks for free from Experian, TransUnion, and Equifax. Having your credit report sets the stage for meaningful steps towards improving your credit score.
2. Pay Bills on Time
Ensuring that your bills are always paid on time assures lenders that when they advance you credit; you will stay on top of your finances. Since a credit card is an extra loan, lenders are keen on any negative markers on your history including missed payments,
One of the best ways to ensure you settle your bills on time is by setting up a direct debit. This means your money gets deducted automatically to pay your bills. If for some reason your bills are due and you don’t have cash at hand to offset them, you can apply for a loan now and have money in your account within 24 hours.
3. Getting on The Electoral Roll
When you register to vote, your details are captured and recorded on the credit check report. From here, lenders can confirm both your address and name. Identity accuracy and verification are important as they help avoid problems with identity theft and fraud.
Accurate information such as that found on the electoral register gives lenders confidence hence the improved credit score. If you happen to change your address, ensure you re-register.
4. Pay Off Debt
Having hefty overdrafts or piling credit card debt can jeopardise your chances of getting approved for a new credit card. Instead of prioritising savings, ensure that you pay up overdue debt first and honour every instalment going forward as it falls due.
Lowering your debt levels improves your credit utilisation ratio. This is calculated as the ratio of the credit you are using divided by the total credit available for use. The lower the ratio the higher your chances of getting approved for a credit card.
Most people have fallen into the trap of low-interest credit cards because of mismanaging interest payments. Since they think that the rates are low, they make little effort to submit payments on time. Before they know it, debt levels have piled up and spiralled out of control.
Always watch out and monitor your debt levels to avoid drifting into the bad credit zone. If you have an urgent financial need, you may consider applying for an emergency loan instead of rushing to get a credit card.
5. Get the Right Loan Type
When going through a financial crisis, it can be tempting trying to get whatever type of credit facility you can to sort out your immediate cash needs. However, not all types of loans out there are for you.
There are some loans such as payday loans that can stick on your credit history for up to 6 years. It is recommended that you do a proper plan, stick to your budget, and only borrow if it is necessary. There are options such as guarantor loans, which do not have as much impact on your credit score as payday loans.
6. Limit the Frequency of Credit Applications
Every time you apply for credit, an entry is made on your credit report. Whether you succeed in getting the load or not, your credit score drops. People who make credit applications every so often send the wrong signals to lenders. It paints the picture that you are struggling financially, and you may not be able to repay the credit card debt.
So, to improve your eligibility, space out your applications. As a rule of thumb, reduce your applications to at most once per quarter. This shows that you are a measured borrower.
7. Sever Old Financial Ties
It happens throughout life that we try different things some of which work, and others don’t. If you have been in a situation where you opened a joint account with someone else or you acted as a guarantor at one point or the other, you need to disconnect and clean up your history.
While such connections may not directly affect your credit score, they could potentially put off lenders, especially where the other party has a poor score. Close any joint accounts which are not serving you any longer and ask the credit reference agencies to have your records updated.
This will keep lenders minds at ease knowing that they are approving a reliable borrower. The lesser the risk the better the chances of getting approved.
Therefore, increasing your eligibility for a credit card involves lots of moving parts. However, the beauty is that whichever part you move, it will have a positive impact not just on your chances of getting approved but also on your credit report.
There is also some good news for people with less than perfect credit histories, they can still get approved as there are lenders who specialise in such categories. However, you need to be on the lookout for the interest rates that are charged. If you don’t find them appealing, continue working on your eligibility to get a much better credit card deal.