2.4 How your credit rating affects your credit card

Before a credit card provider will give you a credit card, they will want to know how you have behaved with your previous credit facilities.

They will do this by checking your credit report.

Your credit report contains details of how you have repaid previous debt, your behaviour when it comes to paying monthly bills, details of previous addresses, how many times you have applied for credit facilities and who you are linked to financially.

From the details on your credit report, prospective lenders will calculate your credit score. The better this is the more chance you have of being given a credit facility.

If your credit score is good enough to get you a credit card, the lender will then look at just how good the score is and from that decide how much interest you will pay and what your credit limit will be.

You will be seen as a bigger risk to the lender if your credit score is good but not great. As a result of this you will get a lower credit limit and have to pay a higher amount of interest.

If you have an excellent credit score you will probably pay a low interest rate and get a much higher credit limit.

(See our guide on ‘How to improve your credit rating’ for more information on credit scores).

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