Rating your credit potential

By Sophie Wright

If you want to take advantage of a low rate credit card, then now might be the best time to do so. Recently there have been some major changes in the world of credit cards; fees for services such as cash withdrawal and use of cards abroad have gone up, limits have been cut and more applications are being turned down. With the economic downturn currently affecting the market both in the UK and abroad, things may get worse before they get better. This means even more changes to the types of cards being offered. One type of card that may be affected is the low rate credit card.

If so many credit card applications are being denied, then how can you get accepted for a low rate card? There are some things that you can do to improve your chances. All of these concern what is known as your credit rating. A credit 'rating' is not a score - it is a file listing your credit history. Your credit file contains details of repayments you have made or missed, agreed spending limits and so on. It is this file that is examined by financial service providers when you apply for credit of any sort. Previously rejected applications are recorded as well, and can affect whether you may be accepted for future credit. Too many rejections are not a good sign to financial companies.

So who holds this information on your credit rating? There are three credit-referencing companies in the UK and all three hold similar data files. Financial service companies often reference at least two or even all three of these companies to get a more rounded idea of what you would be like as a customer.

To maximise your chances of being accepted for credit, there are a number of things you can do. You need to make sure that you make any repayments to existing creditors on time. If you are making credit card repayments then you could also ensure that you pay more than the minimum monthly amount. You can also actively improve your credit rating by applying for easily obtainable credit such as store cards, buy an item each month, and then pay off the balance in full each month. Another way is get a small loan and meet the regular repayments. If you apply for a credit card and are rejected, don't apply for another one immediately, as this has an adverse affect on your rating. Instead, work at improving your credit rating and wait at least three months before you apply for another card.

All of these efforts can improve your chances of getting accepted for a low rate credit card. Low rate cards are one of the most difficult to be accepted for, unless you have a very strong credit rating. With the "Credit Crunch" really starting to bite, the criteria for acceptance on this particular type of card is now even higher. You may find that just a few missed payments now leads to a rejection on an application. Low rate cards are going to be around for a long time, and there are always going to be people who can apply for them. In order to be one of those who do get accepted for low rate cards, you need to have that all-important good credit rating.

To be accepted for a low rate credit card, you need a good credit rating, and a good rating takes work. If you are prepared to build things up slowly then everything should be fine. One word of warning, though. If you get to the point where you feel you are ready to apply for a card and are turned down, don't apply for another immediately with a different company. The referencing agencies also monitor when you are accepted and declined and being declined over and over does not reflect well on your credit rating. Simply carry on working on your credit rating and try again after three months.

About the Author:

Sophie Wright is a financial researcher specialising in UK Card offers and is keen to create awareness about the offers availble to consumers by using compare credit card sites.