Best first credit card: credit history 101

Never had a credit card before? Never fear.

The credit crunch has made cards harder to obtain and it continues to bite for some and bite hardest for new users.

But, with a bit of know-how, there are still plenty of options for those looking to get their first credit card.

Credit history boys (and girls)

The central problem for those looking for their first credit card is generally held to be a lack of credit history.

However, those looking for a first credit card are often not as green as they think.

Credit history doesn't mean just credit cards, mortgages and loans but any long-standing agreement between you and a business that will show up on a report from a reference agency.

More casual borrowing relationships such as overdrafts are increasingly taken into account, especially for student credit cards and so are mobile phone contracts, home broadband subscriptions and the like.

Credit card providers use all of these as a measure of an individual's success with managing credit commitments and, to a lesser extent, as a measure of stability.

Other indicators of stability important both to those new to credit and to old hands include: electoral roll registration, to make it easy for providers to confirm personal information is correct; consistent address information, for the same reason and salary or savings.

All in all, then, it's a mistake to think of credit history as a fixed point - something you either have or don't - or as a fixed rating. All credit card providers have different ways of assessing applicants, as we'll see in the next section.

Getting started

Rather than focusing solely on credit history, first time credit card applicants could increase their chance of a successful application by starting off by considering the type of credit card they're looking for.

The most eye-catching deals - the longest 0% purchases offers; the most rewarding earnings on purchases or travel mile cards - are likely to be out of initial holders' grasp but variations on these - loyalty cards, shorter 0% deals - are available.

For first time applicants, as with all credit card applicants, the important point is finding a specific function that will be useful and then using the credit card as a tool for that purpose.

For more information on how cards work have a look at our simple guide to credit card terms.

Making applications

At the point of making applications, then, first time credit card applicants should have a good idea of the type of credit card they want.

Now it's time for them to see whether credit card providers want them.

As an example, we'll look at the Barclaycard Initial which is one of the few credit cards in the UK specifically marketed to new users.

Barclaycard Initial credit card
	Suitable as a first credit card, with Barclaycard Freedom and purchase and fraud protection.	Apply here »
Representative Example: 29.9% p.a. variable on purchases. This is equivalent to 29.9% APR representative variable based on a credit limit of £1,200. Barclays Bank PLC. Registered Office: 1 Churchill Place, London E14 5HP.

Fairly uniquely for a first credit card, Barclaycard are offering a number of rewards and services, including the Barclaycard Freedom rewards scheme, contactless payments, purchase delivery insurance, additional fraud protection in the form of an Identity theft service and a fraud guarantee, and discounts on travel with Thomas Cook.

Barclaycard offer a lot more information than other providers on the type of applicants they'll consider.

In the case of the Initial credit card, Barclaycard currently state that applicants may be suitable if your financial situation has been improving, if you have missed payments or have had CCJs over 12 months ago.

See the Barclaycard Initial more details page here for further details on the application criteria.

It's vital that applicants meet and, ideally, exceed application criteria at the time of their application.

However, other factors may help.

If you've an established relationship as a current account customer with a bank, for example, they'll often be the best place to go for a first credit card and so their offers may be worth checking out.

It is worth bearing in mind if you go to your bank for your first credit card you'll probably be offered something fairly basic but, well-managed, it could still be the first step to building a good credit history.

Other credit cards specifically marketed to new users include the:
- aqua credit card*
- and the Vanquis issued: Vanquis Visa* and Granite credit card* and the
- Capital One Classic* note that Capital One do ask for applicants who have had "some form of credit" in the UK before but this needn't be a credit card or loan it could, for example, be a mobile phone contract (as long as it's registered with a reference agency).

*Click through for the full cost of credit.

After application

Finally, let's take a quick look at what happens after a credit card application (check here for how long you might have to wait).

Rejection: A fairly high proportion of applications are rejected by providers.

If an application is rejected you have the right to ask the provider why you weren't accepted. If the rejection occurred because of information in a credit reference agency file, you're also entitled to know which agency that was.

It's also worth noting that lenders can see credit searches carried out when you make a credit card application and that these can negatively affect future applications.

For this reason, those with rejected applications can increase their chances of having an application accepted in the future by waiting at least three months between applications, it may also be worth using this time to look at other ways to improve a credit rating first although credit cards can themselves help to build credit history.

Acceptance: Once accepted first time applicants should be as careful as any other cardholder that they manage their account well.

In the first instance, that should mean setting up a direct debit to ensure that the minimum repayment is made to the credit card every month.