Applying for a credit card in the UK is not always as straightforward as one might think. The online checkers make it seem quite easy, but banks and lenders look at a lot of information before approving people. In this article, we will explain the checks that a lender will do before authorising a credit card and the steps of the process.
What Information Do I Need To Apply For a Credit Card In the UK?
When you apply for a credit card in the UK, you need to take some documents in to prove your identity and address. This is to try and reduce the likelihood of identity theft. You may be asked to provide:
- Proof of address (usually a bank statement or utility bill sent to your home)
- Photo ID like a driver’s license or passport
- Proof of earnings through tax returns, bank statements, or payslips
When proving your earnings, you may need to provide a few months’ worth of payslips or bank statements. If you are applying for a credit card with the bank where you have your bank accounts, they may not need proof of earnings.
What Will a Lender Look For When Determining Eligibility For a Credit Card?
In the UK, a lender will look to confirm your identity and perform a credit check. They want to see if you have the means to be able to repay the money that they lend. While a lot of people use their credit card in the place of a debit card, just making their usual purchases and repaying the card in full in order to build their credit score, a bank will assume the credit card will be used for additional spending. They may look at your income and current expenses and see there is not enough to repay an extra £1,000 in spending each month.
Your credit score will help determine:
- If you are eligible for a credit card
- The credit limit you will receive
In some cases, a lender may approve you for a credit card but give you a small credit limit. This is their way of testing you out with a small amount before they agree to lend you a couple of thousand per month. Generally, after a year or two, they may allow you to raise your credit limit if you have made all your repayments on time.
Most banks have an online eligibility checker where you can check if you are likely to be given a credit card. They will perform a soft credit check and return immediate results. The eligibility checker does not guarantee that you will or will not get a credit card because the bank is a lot more rigorous when you actually apply. But it is a good way to get an idea of the likelihood of approval.
What Can I Do If I Am Denied a Credit Card?
Don’t worry if you are denied a credit card. Often, if you apply in person, you can ask what the issue was, whether it was your credit score or not having enough proof of your identity.
In some cases, if you do not have enough of a credit history, if you moved to the country recently or have just turned 18, for example, a bank may not approve you. The bank where you do your banking is more likely to approve you in these circumstances because they can see what your income and expenses are and your financial track record. Other banks and lenders are just looking at your credit score and proof of residence, so may be worried you’ll run up debt and leave the country.
If the issue is that you have a bad credit score or lack of credit history, then you may need to spend a little time working on that before you apply again. There are a few ways you can build a credit score that have a lower barrier to entry than a credit card. This can be as simple as:
- Having a phone plan that you pay on time
- Register with the electoral register to prove your address
- Having utilities in your name that you pay on time
- Using Buy Now Pay Later schemes and not missing payments
- Paying off any consumer debt
- Accessing your credit history to look for any incorrect details or fraudulent activity (and challenging them)
It is also worth noting that if you move home frequently, it can have a negative impact on your credit score. Lenders see moving home regularly as possibly meaning that you had issues paying rent.
Improving your credit score could take up to a year to do.