Credit card questions

book12

Credit card limit

Does it usually match your monthly salary more or less (before tax, NI, etc...)?

Type of credit card

I have an overdraft which I hardly used, so I guess I will have 'limited' credit history or 'next to none' credit history. What is my chances of getting a credit card that doesn't have a high interest rate like BarclayCard Initial, Vanquis, or the like?

I am getting a credit card to build credit history, to prove that I can handle credit, more extra protection when purchasing things than debit card, renting car. More reasons here: http://uk.finance.yahoo.com/news/When-credit-cards-option-yahoofinanceuk-4208139603.html

tigerlily43

Hi there

There is more to it than no credit history - it depends on whether you are on the electoral roll, income/outgoings, how well you manage the accounts you do have (some utility companies report to CRAs now).

The higher rate ones tend to be the ones who take a chance on those with no or limited credit history but use them as a tool as you say and after a year or so of managing them properly you will find mainstream lenders more likely to be receptive.

tigerlily

scottishblondie

Card limit - no, there is no relation between limits and monthly income.

Card type - as tigerlily says. Often your bank is the best to approach about a card first tho.

JasX

scottishblondie wrote: »

Card limit - no, there is no relation between limits and monthly income.

Card type - as tigerlily says. Often your bank is the best to approach about a card first tho.

As above regarding limit.

How do you plan to use the card? you should certainly setup a direct debit to pay off the minimum each month.

If you're planning to be very sensible setup a DD to pay the full balance and get a (non-fee charging) cashback card and so long as you do pay in full every month you'll build a good credit history AND have them paying you money for the privilidge.

cashback cards will come with higher interest rates but if you're never paying any interest at all they're irrelevant... plus if you know its a high interest rate perhaps that'll keep you on the straight and narrow of using it for convieience + protection and NOT a method of borrowing money.

book12

JasX wrote: »

As above regarding limit.

How do you plan to use the card? you should certainly setup a direct debit to pay off the minimum each month.

If you're planning to be very sensible setup a DD to pay the full balance and get a (non-fee charging) cashback card and so long as you do pay in full every month you'll build a good credit history AND have them paying you money for the privilidge.

cashback cards will come with higher interest rates but if you're never paying any interest at all they're irrelevant... plus if you know its a high interest rate perhaps that'll keep you on the straight and narrow of using it for convieience + protection and NOT a method of borrowing money.

Don't worry, I will be using the credit card for convienience and protection only, and not for borrowing money. I will also use it to build up credit history.

I will also set up a DD too.

scottishblondie wrote: »

Card limit - no, there is no relation between limits and monthly income.

Card type - as tigerlily says. Often your bank is the best to approach about a card first tho.

Ok.

tigerlily43 wrote: »

Hi there

There is more to it than no credit history - it depends on whether you are on the electoral roll, income/outgoings, how well you manage the accounts you do have (some utility companies report to CRAs now).

The higher rate ones tend to be the ones who take a chance on those with no or limited credit history but use them as a tool as you say and after a year or so of managing them properly you will find mainstream lenders more likely to be receptive.

tigerlily

I have regular income and outgoings, and manage my bank account well. I am on the voters roll too. I don't pay any bills as I live with my parents. I only contribute to food, petrol (and car related things), mobile top up, entertainment, and the like.

I am going back to the bank I have a bank account with for a credit card.

lisyloo

I will be using the credit card for convienience and protection only, and not for borrowing money.

Interest rates don't matter as you won't be paying any

Be careful in the first month.
Direct debits can take a while to set up so you may need to make a manual payment the first month.

book12

Since graduation in 2009:

• I have a graduate account, and used the overdraft a few times, and paid it back on time. That's my only payment history. Haven't used the overdraft so far this year.
  
• I have been in two jobs. One was a temp job (9 months), which I quit, due to finding a permanent one. Been in the permanent job for about 4 months now. I am waiting until I reach 6 months to apply for a credit builder credit card with my bank, as I think I would score a bit better. Or should I wait until the 8 months, 10 months, or 12 months mark?
  
• Put my name on voters roll during the 2010 canvass period. Didn't put my name during uni, as I was moving every year. Didn't put name on voters roll before uni, as I thought it was optional. Since I put my name on the canvass period, would it (i.e. CRA's) say I live at the address for a few months only? Would this affect my chances of getting a credit card, even though I live at my current address for a long time, and recently on the voters roll? I actually live at my current address for a long time (the bank has this on their system). When I openend the graduate account (without being on the voters roll), I honestly said to them that I lived at my current address 'x' amount of years. They didn't even take my uni accomodation addresses as previous addresses.
  
• My spending patterns are less than £500 a month.
  
• Live with parents.

Now what are my chances? Opinions appreciated.

lisyloo

Very difficult to say, but personally I'd wait until the 6 month mark as you can't afford too many rejections.

book12

Ok. I will wait for the 6 month mark then. Might wait until the last week/day of the 6 month mark.

Also, it will be the first time I will be applying for a credit product, so my first credit search.

chexum

book12 wrote: »

Ok. I will wait for the 6 month mark then. Might wait until the last week/day of the 6 month mark.

Also, it will be the first time I will be applying for a credit product, so my first credit search.

I've seen sudden changes in lender willingness (offers appearing in mail, pre-approved offers bumping up, and mainstream acceptance) after the 18 months mark after a move, which was the last major change in my circumstances.

The quick credit checker on this site* suggests 6 months is the initial shakedown period (before which you will have too little chance), but 18 months seem to be a time when lenders regard your circumstances as stable.

Even if you are declined (and you don't want to pursue an appeal), it cannot hurt, as a year after that, it'll be 18 months, and the search will have fallen off, but they are more important for the first 6 months anyway.

Another approach is getting a Vanquis, if they decline you, and being extra careful with it. But then the freshness of that account will have a detrimental effect for a year and a half too. It's all a question of patience

* http://www.moneysavingexpert.com/loans/credit-rating-credit-score#checker

BTW, about the limits, it really depends on much more of your circumstances, but I had a factor of 12 (i.e. £100 vs. £1,200) between initial limits of cards in a 6 month range - granted the oldest of them were still sub-prime.

If that's of any significance, chances are your first credit limit would be closer to the "sub-prime" limits and thus significantly less than your monthly salary (maybe even lower than half of that), and you'll realise you're "prime" when your new limit is more than that. :cool:

book12

Thanks for your reply chexum.

That means I should wait until the 18th month mark of my employment to apply for the credit card? I'm still confused with your reply.

Also, I hold two accounts (basic and graduate) at the bank and been a customer (who I will be opening a credit card with) for 17 months now so far, if that makes a difference. Before those two accounts, I was with another bank (closed the accounts with them).