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Some people think that applying for a credit card is a simple matter of filling in a form and then being given a licence to spend money at will, only paying for it later on at a more convenient time. However, approaching credit cards with this attitude means you might end up paying for it in more ways than one.
If you are in a position to apply for a credit card then you need to be aware of your credit rating. This is not based on how much money you earn or even on the savings you have but are based on your previous ability to pay back or pay off money you owe.
This could be either on loans, phone or utility bills, credit cards, repayment plans on cars and so on. Your application will be dependent on a successful check of your credit status and the lender will make their decision based on that information.
If you have missed repayments previously you may be judged as a high risk applicant and refused credit. In these instances your credit rating will be classed as ‘poor’ or ‘low’. You can improve your credit rating by proving your ability to repay loans by taking small financial products, however, this should only be done if you are confident you can manage the repayments.
Of course, there are other reasons why you might not be eligible for some credit cards and a number of credit companies view the self-employed as a potential risk as well.
If you can’t prove a steady income (even if you have earned significant amounts in short periods) you might be judged as a risk and if you have previous County Court Judgements or do not appear on the electoral roll you may be considered ineligible.
If you are successful when you apply for a credit card then you need to know what your credit limit is and when you need to pay your bills by. Exceed your limit or miss a payment and you affect your credit status negatively. Manage your finances well and you can really improve your future borrowing potential.
Always look for a card which offers a realistic limit for your situation. If you are looking for poor credit credit cards then remember the limit is likely to be lower and don’t be tempted to accept a card with a higher limit if it will put you at further risk of debt.
To make sure you are ready for the financial responsibilities of owning a credit card, review your current financial situation. Set a clear budget and make sure you stick to this each month – paying off your credit card bill as soon as possible.
Reputable credit card companies, such as aqua card, will encourage responsible spending and this means you shouldn’t be put at unnecessary risk. These companies will achieve this by only offering you a credit limit you can afford and by explaining the potential costs and implications of paying for goods on credit.
