Applying for a Credit Card
Before you obtain a credit card, you will need to complete an application. Credit card providers will assess your ability to repay any money they lend you before issuing you with a credit card. There are two main reasons for this: firstly, they do not want to lend money to people who will not be able to repay them, and secondly, they are under moral obligation not to lend money to people who will not be able to manage the debt.
When filling out a credit card application form, you must ensure all the information you give is honest and accurate. If a credit card company finds out that you lied on an application form, they can decline your application or ask you to return your card. Before you are issued with a credit card, the card provider will assess your application. This process differs between providers, but will generally involve: checking your credit report, ensuring that there is no outstanding debt registered to your name or address, and confirming that there are no County Court Judgements (CCJs) against your name. CCJs are county court decisions which state that a borrower has failed to repay the outstanding balance of a credit or loan agreement. Even if you have subsequently repaid this debt, the CCJ will remain on your credit report and may affect your ability to gain credit in the future.
A credit card company will also assess the information that you have provided on your application form. This information will help them to calculate a credit score. This credit score determines whether or not your application is accepted, and if so, also helps to determine an appropriate credit limit and interest rate. Although the majority of customers will be offered the advertised interest rate by a card provider, your rate may be different to reflect your personal circumstances. For example, you may be given a relatively small credit limit at first if you do not have a credit history, but this can be increased over time if you show that you are able to use your credit card without getting into debt. However, if you have excellent credit history and apply for a standard credit card, they may offer you a better deal instead.
