Ultimate guide to getting your first credit card

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Getting your first credit card isn’t always as straightforward as filling in an application online and getting your card in the post.

Many credit card providers are reluctant to approve first time users because of the increased risks involved.

They might easily get into debt if they’re not using their card responsibly, for example, or they might default on their payments.

So unless you already have a good credit history, or can demonstrate that you have a healthy income, you might be rejected outright.

There are providers and credit cards that are designed for first time users though – and there are things to consider before you apply.

With that in mind, here’s your ultimate guide to getting your first credit card.

Do you actually need a credit card?

Before you apply for a credit card, you should be asking yourself whether you actually need a credit card and what you’d be using it for.

Credit cards are useful for providing Section 75 protection for your purchases, and they’re a bit more secure when you’re travelling, but not everyone needs one.

You can get some of the same financial protection through chargeback, for example.

If you just want to build your credit score, you can do it without using credit cards or any form of borrowing.

It’ll take longer, but it is possible.

If you’re hoping to take advantage of a 0% interest offer, you should definitely think about affordability and whether you have a plan in place to pay it off.

And if you want one for the rewards and cashback then you should look at your spending habits and whether it’s feasible to meet any spending requirements – because even debit cards offer cashback and other rewards these days.

Read this: Best reward current accounts

Can you get a credit card with no credit history?

The simple answer is yes, you can get a credit card with no credit history or a poor credit history.

But depending on your circumstances, you may need to do some scouting around first for options.

Most credit card providers offer a pre-approval eligibility check and you should absolutely use this feature before you apply.

Basically you plug in your numbers – stuff like your income and expenses – and it will tell you whether you’re likely to be approved or rejected.

Running the eligibility check first means you don’t have to go through the full application if you’re likely to be rejected.

And unlike applying and getting rejected, an eligibility check doesn’t damage your credit score.

How to find your first credit card

Before you apply, it’s worth thinking about what type of credit card would work best for you.

If you travel a lot then one that offers fee-free transactions abroad will obviously be your top choice.

And if you’re pretty good with money, a cashback or reward credit card might be worth it for the extra perks.

But to actually find out what credit cards are available to you, you’ve got a few options.

For most people

One of the easiest ways to find out what credit cards are available to you is to sign up for a free account with one of the three credit reporting agencies.

Based on the information you supply, the credit reporting agencies – Experian, Equifax and TransUnion – will all recommend credit cards that you might be eligible for, which can help whittle down the selection.

Eligibility is not the same as approval though so it’s still worth going through the lender’s eligibility checks before you apply.

For high earners

If you’re a high earner, you’ll likely be approved for most credit cards.

The exception is if you’ve previously been in problem debt or have a poor credit history for another reason.

If you have good financial standing, it’s worth going through a comparison site like MoneySupermarket*, choosing the credit card you want and completing eligibility checks instead of waiting for a credit reporting agency to suggest products for you.

It’ll be faster and easier and you’ll see many more options.

For students

Student credit cards are becoming rarer these days but you can still get one through some banks, especially if you have a graduate or post-graduate account with them.

HSBC is one of the few options available, alongside Vanquis.

You should double check eligibility criteria before you apply as sometimes these can be more strict than standard credit cards.

For those with poor credit history or no credit history

If you have no credit history or a poor credit history, you’ll want to look for a credit builder credit card.

Natwest, HSBC and Barclaycard all offer one specifically for credit building.

Unlike student credit cards, there are usually minimum income requirements for these.

How to choose your first credit card

Eligibility will determine what credit cards are available to you while lifestyle factors will influence what type of credit card is best.

But for first time credit card users, there are actually other factors that might be more important to consider.

Depending on what you need the credit card for, you should pay extra attention to the credit limit and the APR (Annual Percentage Rate) offered to you.

The credit limit caps how much money you can borrow on your credit card.

Higher isn’t always better in this case.

If you need to buy a big ticket item, of course it helps to have a higher credit limit.

But actually, if you’re not sure how responsible you will be, a lower credit limit can help you adjust your expectations and curb your spending.

The APR, meanwhile, represents how much interest you’ll pay if you don’t pay off the outstanding balance in full when it’s due.

Lower is better in this case – although if you clear your balance every month, the APR can be largely ignored.

The other thing you should look at is fees.

For example, some cards will let you withdraw cash abroad for free but will charge you a fee to do it in the UK. Either way, you would be expected to pay interest on that cash until you pay it back.

Common mistakes to avoid 

There are a few common pitfalls for first time credit card users, mainly because they haven’t read the small print.

Missing payments

One of the worst things you can do with a credit card is to miss a payment.

Instead of helping to build your credit score, this will actually damage it.

Missed payments are reported to credit reporting agencies and will tell other lenders that you’re risky and unreliable.

This will in turn reduce your chances of credit approval in future, including for a mortgage.

Paying the minimum amount

Although a credit card provider will always let you pay the minimum amount and not the full balance, doing so will generally incur interest at the APR offered to you.

The exception is if you have a 0% interest card, which charges 0% interest on your balance as long as you meet the minimum repayment requirements.

However, if you don’t have money put aside for the balance, you can quickly get into debt when the interest free period is up.

Applying for too many credit cards

Doing a simple eligibility check wouldn’t hurt your credit score.

However, every time you actually apply for a credit card, the lender will run a hard credit check on you with one of the credit reporting agencies.

This check is recorded on your file for at least six months and is available for other lenders to see.

If you have too many of these credit checks in a short amount of time, it will suggest to other lenders that you’re in financial distress and they will be more likely to reject your application.

And unfortunately it’s a bit of a downward spiral as the more rejections you get, the worse your credit file looks.

It’s worth noting that you can have multiple credit cards.

For example, I use one for personal spending and one for work, which makes things simpler when I do my tax self assessment.

The trick is to keep your spending on each card reasonable and not to apply for a whole bunch at the same time.

Not having a repayment plan

Credit cards allow you to spend all month and the money doesn’t come out of your bank account until the balance is due.

If you’re not good at managing your spending, you might find that you don’t have enough money at the end of the month to pay off your balance.

So even though the money isn’t leaving your bank account straightaway, you should always make sure you have enough to cover the balance when it’s due.

Otherwise you’ll end up paying extra in fees or interest and potentially damage your credit score.

Who shouldn’t get a credit card

Credit cards are not for everyone.

While they come with all sorts of benefits – from financial protection to credit building – they are only really worth it if you’re good at sticking to a budget and managing your spending.

This extends to if you’re someone who easily gives into temptations, or has a gambling or addiction issue.

Because without good money management, credit cards can get you into problem debt really quickly and ultimately damage your financial health.

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