Think about the way you use your credit card

Credit cards are used by different people for different things, and how you use them may impact on your attractiveness to card issuers when applying for cards in the future.

Some holders use their credit cards for everyday spending, paying off the entire balance at the end of each month or when it is due. By using their cards in this manner they don’t pay interest charges. Almost two-thirds of UK credit card holders clear their balance each month and if the card they use is tied to a loyalty scheme it is a good way to maximise the amount of points, air miles or other scheme benefits they collect, at no charge.

Other credit card holders may not use their cards for purchases at all but instead use them as a source of cheap borrowing; transferring one interest-free balance to another card in order to fund a prolonged period of borrowing at no cost.

Another type of card holder falls somewhere in between the previous two, paying off the entire balance each month when they can afford it, or carrying forward a balance incurred during expensive months, such as around Christmas or holiday time, to be paid off in subsequent months. Finally, around one in ten cardholders pays the minimum payment each month, carrying forward the majority of their balance. Whichever of the previously mentioned methods is used by card users may influence their credit profile, and influence issuers’ decisions when it comes to applying for new cards.

However, for people that may be new to the country or just entering adulthood and therefore have no established credit history, getting a credit card is extremely difficult. In such cases some card issuers offer a ‘starter’ card. With a small credit limit, typically up to £2000 they normally carry a higher credit card rate than the issuer’s mainstream cards. However, this type of card is very useful for those developing a credit rating and also for those attempting to repair a poor credit history.

When it comes to finding out what cards can be offered to you, rather than submit a formal application it may be possible to ascertain whether you are eligible for particular credit cards by submitting a pre-application check. This takes your personal information and looks at your credit rating without leaving a formal search on your credit file. Instead, it leaves a footprint saying that your information has been accessed but does not affect future credit checks as it does not appear as a formal search. However, only a very limited number of credit card issuers offer this service; so before you submit any formal application check whether you can use this method instead.

An alternative to credit cards are pre-paid cards that carry either the MasterCard or Visa logo. Because you need to load these cards with cash before you can use them there is no need to carry out a credit check upon application. However, the downside is that no information is passed back to credit reference agencies, so having such a card will have no impact on your credit rating; either positive or negative.