Compare credit cards
What's in this guide?
- Compare credit cards
- What does "guaranteed approval" mean?
- How can you really be approved for a credit card?
- What criteria do I need to be approved for a credit card?
- I've got bad credit, but have been "pre-approved"
- I've been rejected for a credit card. How can I improve my credit score?
- Dos and don'ts
- Frequently asked questions
What does “guaranteed approval” mean?
When you’re told that you’re guaranteed or pre-approved, it’s based on what the card issuer knows about your circumstances. This could be from an existing relationship you have with it – perhaps it’s the bank you have your current account with – or perhaps you’ve used an eligibility checking service, which runs a “soft search” of your credit file (that’s a search that doesn’t affect your credit score and isn’t visible to others).
If you receive a “guaranteed credit card” or “pre-approved” offer online or in the post, the credit card provider is likely to have selected your details from its database, perhaps from a previous application or an old credit card. Alternatively, it may have bought your customer details from a third party. Under GDPR (General Data Protection Regulation), companies that store your data must obtain your consent before selling your details to a third party (you may have “opted-in” at an earlier date).
Ultimately, these credit card providers are using the words “guaranteed approval” or “pre-approved” to attract new customers. After all, nobody likes getting rejected. These terms can give you a strong indication as to your likelihood of getting that final green light, but there are always final checks required – and a minority of applications will fall down at this final hurdle.
The providers will be basing their “guaranteed credit card” offers on the limited information they have about you, so they may not have your current, full financial picture. They could also be basing their offer on out-of-date information and your credit score could have significantly changed since then. This means that while you may have been eligible for a credit card in the past, you would not be approved based on your current credit score or financial situation.
If you do have bad credit, then all’s not lost because there’s a growing number of cards specifically designed for lower credit scores, but you should run an up-to-date eligibility check before you hit “apply”.
How can you really be approved for a credit card?
You can only be approved for a credit card if you go through the application process and meet the provider’s criteria. This cannot be done on your behalf without your consent.
Before you apply for a credit card, it’s good practice to perform an eligibility check. This is classed as a “soft or smart search” on your credit report, which doesn’t affect your score and gives you an idea of your chances of success in being approved and your likely credit limit and interest rate. When you make an application for credit (e.g. credit card, mortgage or personal loan), the lender performs what is called a “hard search“, which does impact on your credit history.
Lenders can’t perform a search on your credit history without your consent. If you see searches on your credit record that you don’t recognise, you can query these with the credit reference agency.
What criteria do I need to be approved for a credit card?
Card issuers generally state the minimum criteria you’ll need to meet in order to be able to apply – UK resident, over 18, and so on. Card issuers that specialise in bad credit will have a fairly short list, while the most premium cards might have super-high minimum income requirements or might require you to be an existing customer.
Minimum credit card requirements usually include:
But as well as this there’s the behind-the-scenes evaluation of your circumstance which card issuers are less upfront about. This will involve looking at your credit report and analysing your income and spending habits.
But the most important factor is whether or not the credit would be affordable. Any card issuer will need to see that you have a clear source of income and that it’s sufficient to cover the potential debt that a credit card would let you get into.
I’ve got bad credit, but have been “pre-approved”
If you know you’ve got a poor credit history, you may have been pleasantly surprised to receive a credit card offer in the post or online telling you you’ve been “pre-approved”.
Bad credit is a once-overlooked segment of the market that is now served by a number of banks and specialist lenders. But it’s still wise to be cautious and explore all your options first. Firstly, the card issuer is making you an offer based on limited information they have about your credit report. If you make an application, which will allow them to access your full report, it’s possible it could change its mind about offering you a card. Alternatively, it may offer you a different card product than the original one marketed to you.
The credit card it offers you may not be the best deal for your financial circumstances. Customers with poor credit scores can be offered credit cards with low limits and incredibly high interest. It’s always better to research what else is out there before deciding on a credit card which best suits your needs.
I’ve been rejected for a credit card. How can I improve my credit score?
If you have no credit history or a poor credit score, you could struggle to be approved for mainstream credit cards. From the perspective of the credit card company, a low credit score suggests you may be a higher risk of failing to make your repayments.
One way to improve your credit score over time is by opening a credit builder card. These cards typically have low credit limits, high interest rates and little rewards, but allow you to boost your credit report by making regular monthly payments. As your credit score improves over time, you may be able to progress to more mainstream credit cards with more attractive interest rates and rewards.
Dos and don’ts
Credit card providers have different reasons for accepting or rejecting your application.
Here are some important dos and don’ts to help you increase your chances of acceptance and how to manage your credit card once you have it.
- Use the eligibility check first before applying (even if you’ve received a pre-approved or guaranteed offer of a credit card).
- Register on the electoral roll at your address if you haven’t already. This usually increases your credit score.
- Pay off your full balance every month to avoid high interest charges.
- Look out for annual or monthly fees or any other charges.
- Use a credit card for a large purchase. If something goes wrong with the item or the retailer goes bust, you are protected by Section 75 and are usually entitled to a refund. If you paid on a debit card, you would have little to no protection.
- Don’t blindly accept whatever credit card you’re offered. Research the best credit card for your needs.
- Don’t make multiple credit card applications at once.
- Don’t forget to pay on time – you’ll accrue penalty fees as well as high interest and could also lose any introductory offers, such as 0% interest, you may have.
- Don’t spend beyond your means.
- Don’t withdraw cash on a credit card. This is treated as a cash advance and usually accrues interest immediately.
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