If you’re applying for a card for the first time, or are a seasoned-pro, this superb How to get accepted for a credit card could be a great place for you. Typically, most people won’t ‘know’ how likely they are to be accepted for a card until they apply.
Banks and providers have a huge list of criteria’s before accepting an application, not all companies have the same criteria either, which makes things a little more complicated.
Equally you should also be aware that each time you apply will be recorded on your credit file. This means that applying for multiple cards at a similar time is not a good idea in practice. It can often ‘show’ card providers that you’re ‘desperate’ for credit, thus you’re more likely to be rejected.
At the end of the day, a credit card provider wants to have confidence in your ability to ‘pay back’ any credit you may obtain. Generally, the best rates are offered to customers who have the best credit scores. Like jobs, the most qualified candidates usually get higher salaries.
You can ‘sometimes’ improve your credit score by doing the simple things correctly, for example being listing on the electoral roll, checking your score for any errors and maintaining a healthy financial position.
Which One is Correct for You?
Before applying for a credit card, you need to consider which card you should get. Just like purchasing a concert ticket, some forms of credit cards can be more popular than others.
This can mean a lender may only accept a certain level of customer for a particular card. If your credit score is low or unfavourable, a card provider may see you as a risk compared to other people.
In the UK, a balance transfer credit card is generally one of the most popular cards, this is usually followed by a purchase card, low interest card, rewards card and a travel card. As you can see this can result in more applications for balance transfers, thus the card provider may seek higher quality customers.
Reasons for Credit Card Rejection UK
We all hate being rejected, but unfortunately, it’s a fact of life. Credit card rejections can even happen to the best of us and sometimes it can be hard to understand why its happened. As each bank, building society or card provider have unique application processes, we may never truly understand why a client gets rejected. However, we’ve detailed some of the most ‘common’ reasons below:
Missed or Late Payments – Missing a payment on an old card can be a big no-no, while it usually won’t be recorded as a ‘default’, it may affect future applications.
No Credit History – Unfortunately what comes first, the chicken or the egg? The same can be said for customers will a low credit history, how can you build up a good credit rating without getting credit. In most cases your best bet for a credit card is to visit your bank or building society.
Loan Defaults – Just like missed payments, a loan default is a serious no-no, it shows lenders you’re not responsible with your money and lack control of your finances. Defaults can be a serious issue when applying for credit, make sure your credit file and history are in good shape before applying.
Court Judgements – Having a County court judgement against you, tends to be an automatic reason for rejection. Depending how long ago the judgement was issued, ‘some’ providers may consider your application, however others won’t.
Multiple Applications – Making a lot of applications for credit in a short period of time can seriously hamper your chances of success. Most lenders will view this in a negative light, it shows you’re frantic for cash and will most likely have a hard time paying them back.
Obviously, the posts outlined above are not conclusive, there can be multiple reasons for a credit rejection, sometimes it can even be your postcode! As most lenders have different levels of criteria, there can be no way of truly knowing the reasons behind a credit refusal.
Tips for using a Credit Card
If you want to find out some money saving tips for using a credit card, then the section below could be ideal for you.
Remember being accepted for a card means you need to be responsible with your money and your spending habits, here’s some good tips to think about:
Penalty Charges – It’s always recommended to pay your minimum payment amount every month, after all, a missed payment will usually result in a penalty charge. This generally puts a ‘mark’ on your credit file, although it’s not as serve as defaulting on a card, it may still affect future credit applications. You should also be aware, that some providers will have a penalty charge for ‘exceeding your credit limit’. Please read all documentation and conditions related to your card and provider so you’re fully aware of what charges may be applied.
Pay More – Sometimes people get complacent with credit, after all making the monthly minimum payment is easy to do. However, the larger the balance, the more likely you’ll be getting charged more interest, thus you’ll end up paying more money in the long run. If your budget allows you should typically try to ‘pay off’ as much as you can afford each month.
Cash Withdrawal – It can be tempting to withdraw cash from an ATM machine with your credit card, however there’s usually a standard fee for ATM withdrawals. Generally, this will have a higher interest rate too and in some cases no interest-fee period (if applicable). Once again, its recommended to read all of your cards documentation and conditions before using.
Card Protection – In most cases people feel ‘safer’ using a credit card due to the protection attributes it can bring. Credit cards can offer protection on purchases up to £30,000 (in most cases), this means if a travel company goes out of business, you should still be able to ‘re-claim’ the money back from your credit card provider. Equally card protection can also help if your card is stolen or lost, all you need to do is simply report it to your bank / provider. The card will then be cancelled and a new one will be issued to you.