Getting hold of a credit card is an excellent financial decision. It can help you to get by in case of an emergency or you can use it to build up your credit history.
We would recommend that all students, and young people with no credit, get a credit card. Spend a low amount on it each month (around £30) and pay it off in full. This ensures that every month you have a ‘full payment’ notification on your credit report; after a while this all adds up to an excellent credit score.
Whatever your reason for applying for a credit card this is a short guide about how to apply for one:
- Always check your credit history. You can use a thirty-day trial from most credit rating agencies to see your credit score. It does not need to be perfect but any negative marks may affect your application, you should keep this in mind. It will also give you an idea about the kind of cards for which you can apply: from credit builder to a cash transfer card. If you’re denied then you should get a full copy of your credit report—for which you’re legally entitled and costs £2 to get hold of.
- Always compare different credit card deals using a comparison service. Make sure you compare interest free periods, charges and other information. This will allow you to properly choose the right card for you. Most companies will now ask for applications to be made online.
- Apply for your credit card using the online application, filling in all of the information 100 per cent accurately.
If you’re rejected:
If you are rejected from your application then there are steps you should take. Because having a denied application does not look good on your credit report, you should always try again.
1. Get hold of your credit report from any credit rating’s agency, and photocopy it.
2. Get hold of proof of income.
3. Get hold of two proofs of address and some photographic ID, and photocopy them.
4. Collate all of this information together in a ‘credit fact file’.
5. Write a covering letter to the credit card company that rejected you using the following guide to help you:
The address of your credit card company
To whoever it may concern,
I recently made an application for a [name of the exact type of credit card for which you applied] with [credit card provider]. I had intended to use this card to [build up my credit/use for emergencies/etc.]
(If there is an error that caused your rejection) I believe my application was erroneously rejected because of [a mistake on my credit report/an error on the application]. I have attached my credit report in full in order that you can see and review the decision you have made based upon the full information.
(If there was no error) I believe my application was rejected because the full information wasn’t available during my online application. I have attached my credit report in full in order that you can see and review the decision you have made based upon the full information.
In order to further support my application I have further attached income information, which proves my yearly income of [insert your income here] per annum.
Moreover I have attached proof of address and identity with this application.
I trust that this information will aid you in reassessing my application. I look forward to working with [credit card provider].
[Insert your name here]
You should ensure that you send it to their credit review department; you can find this by ringing the company to which you had applied.
The benefit of sending a letter to back up your application is that a human being instead of a computer formula will assess your application. Furthermore as your credit score is already on their file, and you have provided a full credit report, another credit search will not be performed.
If you are (and most of you will be) successful in this, then it will look better on your credit report. This is because you will have one credit search and one new account, instead of a failed application.
In short, if you are rejected by a credit card provider, then you should always pursue it further.