Why can't I get a credit card in the UK?

If you've ever tried to get a credit card in the UK you know it can be confusing to understand why your application has been rejected. Often it's down to poor or little credit history, but there are other reasons you might not be eligible as well.

In this article, we'll take a look at the common causes, how to overcome them, and some interesting alternatives to credit cards that you might not have considered.

Credit score and history

A poor credit score or limited history is one of the main obstacles that leaves people wondering “Why can't I get a credit card” in the UK?” Your credit score is a number that represents how trustworthy you are in the eyes of financial institutions based on your credit history and financial habits.

Lenders use credit scores to measure the risk of lending money or offering credit. Here's a brief overview of how credit scores work.

There are three big credit reference agencies (CRAs) that calculate credit scores in the UK:

1. Equifax
2. Experian
3. TransUnion

They all use their own scoring systems and algorithms to generate a number generally between 0 - 1000 to measure your financial health. While they all have slight differences in how they generate and categorise scores, chances are if you have a 'good' credit score with one you'll also rank high with the others.

If you have a history of missing payments, defaults, or county court judgements (CCJs), your credit score will probably be poor. That means lenders like credit card issuers will see you as high-risk and can reject your application.

Situations like bankruptcy or IVAs will also likely stop you from getting approved for a credit card as they are clear evidence that you have had financial issues.

Your credit score can also be affected by financial associations. If you have financial connections (like a joint account) to somebody with bad credit your creditworthiness will suffer in the eyes of lenders.

Even if you don't have bad credit or negative financial connections, lenders might reject your credit card application if you simply don't have enough credit history. This is common for new arrivals to the UK or young people.

Income and employment

Many credit card issuers will have policies regarding your employment and income status. Lenders need to know you have a stable income that is enough to repay any credit you use.

For this reason, issuers often need applicants to hit a minimum threshold of income to be eligible. If you don't earn enough you can be denied for this reason.

They'll also consider your debt-to-income ratio. Even if you're making payments on time for credit already gained, issuers need to know your income will cover any additional repayments so a lower ratio is preferable.

Your type of income will also affect how credit card issuers assess your application. Freelance and contract work is seen as less stable and reliable than a permanent regular job and can impact your ability to get a credit card.

It should go without saying that if you are unemployed it is unlikely you will be eligible for a credit card as issuers won’t have any evidence you can pay debts back.

Residence Status

Non-UK residents or people without a stable address can have major difficulties in getting a credit card. Most UK issuers will require applicants to be permanent residents so they can reach you if they need to, and a permanent address is necessary to track your credit history.

Lenders also need to know they can reach you in the future, so you might have difficulties if you are in the UK on some form of temporary visa (like a student or work visa) and don't have indefinite leave to remain in the country.

How to get a credit card in the UK

Whether you're trying to get a card from a high street bank or a digital credit card, it's important to address the issues getting in the way.

As we've discussed, receiving a stable income and having a permanent address is important, but it's often your credit history or score that can hold you back. Read our guide to building your credit score to find out a full list of steps to be on track to getting a credit card.

Look into a credit builder

Credit builders are special accounts designed to help you build your credit score. By paying in a small regular amount each month that is reported to credit reference agencies, you can show your creditworthiness to lenders and improve your score.

They're also easy to set up and don't require high credit scores or intrusive hard credit checks to get started.

For example, with Pockit's Credit Builder, all you need to do is make a monthly payment of £9.99. You'll get access to amazing rewards and cashback facilities, and can even apply for up to £500 credit at 0% interest* after just three months of paying in.

Alternatives to credit cards in the UK

Basic bank accounts

If you're just looking to use a card to spend money, make online payments and store your cash, a basic bank account is generally easy to set up and doesn't involve credit checks. You can get basic accounts from most high street banks by visiting your local branch.

You'll still be able to do things like set up direct debits and use online banking, but won't be able to access any form of credit.

Prepaid accounts

A prepaid account is funded in advance by adding cash, transferring money, or getting your salary paid into it. Since you're not borrowing any money you can set these up quickly with no credit checks, often online.

Prepaid cards also tend to come with better bonuses than basic accounts with old-fashioned high-street banks. For example, you can be approved for Pockit's prepaid card in as little as 3 minutes, and get access to these amazing benefits:

Cashback Rewards

• Get up to 15% cashback and discounts with selected high-street brands.
• Get 2.5% back on all other spending & Direct Debits on the first £100 spent.
• Save up to £264 on mobile, TV & broadband bills.

Purchase Protection

• Protect your eligible purchases of up to £1,000 in case of damage, theft or returns.
• Refund up to £1,500 of unused tickets if eligible.
• Extend warranty by 12 months for brown goods.

To stop wondering 'why can't I get a credit card in the UK' and take advantage of either of our fantastic free bank accounts (with no credit checks!), get in touch. We're always on hand to answer any questions!

FAQs

How can I increase my chances of being accepted for a credit card?

You can increase the likelihood of being accepted for a credit card by making sure you have a stable income, registering on the electoral roll to prove you have a permanent address, and building your credit score.

How do credit card companies decide who to lend to?

Credit companies perform what's known as 'hard' credit checks to decide who is trustworthy to lend to. If your credit score is 'poor', 'very poor', or otherwise doesn´t meet their threshold you might be turned down. You can also be turned down for not having a long enough credit history.

How will my credit rating be affected by applying for a credit card?

Too many 'hard' credit checks in a short space of time can negatively affect your credit score. If you've been turned down for a credit card it's probably best to look into your credit score before applying with other lenders.