If you are new to the country or young, you may struggle to get accepted for credit as you don’t have any credit history.Read on to find out how you can improve your chances of being given a credit card or loan.
Credit is basically borrowing money. A company extends you a line of credit that you can spend, then you have to meet the repayment terms. There are numerous types of credit – credit cards, loans, mortgages, hire purchase agreements and overdrafts, for example.
Other credit agreements might include mobile phone contracts and gym memberships, where you are allowed access to goods or services in return for regular monthly payments.
Lenders base their decision about whether to lend to you on several factors:
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Getting your free credit score will not damage your credit rating.
Getting credit is a bit of a financial beauty contest – you need to make your credit rating attractive to lenders. For full details on how to do this read our guide to improving your credit rating. If you don’t have a credit report yet – as you’ve never taken out credit – here’s how to start building one:
If you owe money and don’t pay it back, your creditors may eventually take you to court. If an order is granted against you, it’s called a county court judgment, or CCJ. This outlines exactly how much you have to repay and is rubber stamped by the court. If you don’t pay up, your creditor may send bailiffs to your home or take money directly from your wages or bank account.
Getting a CCJ damages your credit rating because it immediately flags up to lenders that you have debt problems.
If you’re looking for your first credit card, start by tapping your details into our personalised credit comparison tool. It only takes a minute and then we’ll present you with a list of the credit cards you are most likely to be accepted for. If nothing comes up due to your lack of credit history you still have a couple of options. The bank where you hold your current account is more likely than other lenders to give you a credit card because you already have a relationship with it and it knows your financial history.
If your bank won’t give you a credit card, consider applying for a credit-building credit card. This type of card will have a high APR and low credit limit but if you use it correctly – by paying off the balance in full each month – it can help improve your credit score. Once lenders have seen that you can handle credit responsibly they will be more willing to lend you money at better rates.
If you have a current account, ask your bank for an overdraft. This will allow you access to a small amount of credit, which providing you use it responsibly – don’t go beyond your limit – will help improve your credit rating. Just keep an eye on the interest rate, some banks offer interest-free overdrafts but others charge eye-watering interest rates.
It’s not a good idea to make multiple credit applications in a short space of time. Most applications will leave a footprint on your credit record and footprints can be seen by other lenders checking your report. Too many suggest you are desperate for cash which makes lenders less keen to lend you money.
So, before you make any applications use our comparison tool to work out who is most likely to accept you application. That way you only need to make one application.