How Do I Apply For A Credit Card?
In order to apply for a credit card you need to either:
- complete an application form; or
- sign and return a pre-arranged application form.
In the former, you approach the credit card provider and request that a credit card be issued to you. In the later, the credit card provider approaches you and informs you that a credit card in your name has been approved, with a specified limit, and all you need to do in order for the credit card to be issued to you is to complete the form and return it to them. In either case, the credit card provider will take into account two essential elements prior to agreeing to issue you with a credit card, namely:
Your Credit History
As the name suggests, your credit history is a record of all your previous borrowings. In particular, the credit card provider needs to know that you are diligent in repaying your debts and that you have not defaulted on any debt repayment. For these purposes, debt repayments can include anything from repaying a personal loan or hire purchase transaction to making sure you pay your utilises bills on time.
There are two basic ways that a credit card provider can check your credit history:
- your credit rating score – which is a process whereby credit card companies will ‘score’ your credit rating based on your previous repayment record and additional personal information about you; such as what your current salary is, how long you have been with your current employer and how long you have lived at your current address;
- your credit reference rating – which is a process whereby the credit card provider will check with the credit rating references to see if you have any ‘bad’ credit remarks. This can be done because lenders centrally collate information about you with credit rating reference agencies, who then disseminate the information on request.
As you can see then, ensuring you establish and maintain a good credit history is central to any application for a credit card. Nevertheless, mistakes can happen (see identity theft below for a prime example). As such, not only is it vital that you establish and maintain a good credit rating, it is also essential that you make sure that the information collected about you by the credit rating agencies is up-to-date and correct. You can ensure this is so simply by requesting that the credit rating agency provide you with a copy of your credit rating. If you then find the information about you is incorrect, you can require that they amend their records within 28 days of you notifying them of such (with evidence of this fact). Practically speaking, however, the credit rating agency will likely conduct a investigation into the matter with the lender who has provided them with the information you believe to be incorrect – so don’t expect it to be plain sailing if you do need to make a change, you may well need to fight for your right to have your credit rating reflect a true and accurate picture of your credit past!
Credit Card Limit
Once your credit card has been approved, the next step will be determining your credit card limit. Ordinarily, your credit card limit will be dependent on what you current salary is. However, in certain circumstances you may be able to persuade your credit card provider to give you a higher credit rating based on the amount of savings you have. If you decide to take this option, make sure, where possible, that you do not need to assign your savings to the lender in return for you having the higher credit rating – as your savings are important if you have a cash-flow problem and you will not be able to revert to these if you have agreed to assign them to the credit card provider in exchange for them agreeing you a higher credit card limit.
Credit Card Application Fails
Obviously if your credit card application fails, you may well find this very upsetting or annoying. However, unfortunately that is not very much you can do about this, bar asking for a credit agency report to see if any of the information in there could have resulted in your application being turned down. In any event, no two credit card issuers have the same criteria for agreeing to issue a credit card, so if you fail with one application, unless you know you have a bad credit history, there should be nothing stopping you from applying to another credit card provider.
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