How to get your finances in line before a credit card application
Published 31 October 2016 by Linzi Nuttall
Make sure you get your finances healthy before any credit card applications.
Are you in two minds as to whether you should apply for a credit card? You might be unsure whether to take one out if you’ve heard the stories of people struggling to pay back what they borrow. But a credit card can help spread the costs of one-off purchases, help you to budget if you repay on time and offer extra financial flexibility if you use it responsibly.
If you follow a few simple rules and pay back what you borrow on time, it will help boost your credit history. This can be a fantastic help if you apply for credit in the future, particularly if you’re looking to take out a mortgage.
If it’s your first card
If this is the first time you’ve had a card, you might find it tougher to be accepted for certain credit card deals. Even if you have been good at saving and are responsible with your finances, not having had credit before can reflect on you negatively. That’s because some lenders want to see that you have a record of repaying credit on time before they give you access to the best deals.
And if you have held back on taking out a card because of any previous credit problems, it’s important to know that those details are held on your credit file for at least six years. After that time has passed, if you’re looking to borrow, you’ll need to slowly build up your credit history again.
Build your credit history
If you start to establish a credit history, lenders will have more faith in your ability to pay back what you borrow. This can enable you to take advantage of more competitive credit card rates, get better deals on loans and can even help you get a wider range of deals for your first mortgage.
There are numerous ways to build up your credit history. Start by always paying utility bills and your mobile phone contract fully and on time – they can contribute to your credit file. You can also boost your credit history with your rent.
It’s important to be on the electoral roll. This doesn’t mean you have to vote – it just lets lenders know that your address and details match up with those you’ve given out. This is important when lenders are carrying out their fraud checks on you.
Getting a card
Some lenders offer cards for those who’ve never taken out credit before or those who have a poor history. They’ll tend to offer you a credit building credit card with a small limit. Be sure that you use your card sensibly and not solely to plug the gap before the next payday or to cover your important bills.
Have a look at your monthly budget to ensure that you could still afford to cover everything else as well as your credit card repayments. Avoid using your card to keep you afloat as what you borrow can start to build up and this could take months and years to pay back. That’s why it’s better to pay back more than just the minimum and instead, try to cover the whole balance each month. By doing this, you’ll avoid paying interest and establish great foundations for your credit history.
thinkmoney have a credit card using a QuickCheck tool which lets you see if you’re likely to be accepted or not without the application showing on your credit file.
Know if you're accepted before you apply with thinkmoney's Credit Card QuickCheck
- Credit up to £1,500
- QuickCheck won't affect your credit rating
- Get a quick response in 60 seconds.
39.9% APR Representative (variable)
Think Money Ltd (Credit Broker). Capital One is the exclusive lender