Finding the right credit card can be a daunting process especially with so many products on the market, all boasting about different interest rates, special conditions and unique benefits. This guide is designed to help you navigate the minefield of personal finance and give you a better understanding of the how the credit system works, before you apply for a credit card.

When choosing a brand of credit card in the UK it is important to decide how you want to use it and what sort of borrower you are. Do you want it for emergencies, a one-time purchase or simply to reduce the need to carry cash? Are you a student with no credit rating or an established professional with a regular income? One thing is certain, there is sure to be at least one deal that suits your needs best.

Every money lender has their own special criteria to decide who their ideal customer is but all of them rely heavily on data provided by three credit reference agencies. These commercial companies compile data about individuals from a range of sources to help money lenders decide whether to authorise a loan or credit agreement.

Because of government legislation it is now cheap and easy to check your own credit rating for yourself. Even if you think your rating is good it is still a good idea to check it at least once every year for fraud or identity theft. Each check only costs £2 and can be done online or by telephone with these credit reference agencies: Experion 0844 4818000; Equifax 0870 0100583; and Call Credit 0870 0601414.

If you have a bad credit rating in the UK or have not taken out a credit agreement before you may find your only option is a bad credit credit card to help you repair or build your credit rating. Students without credit scores get a better deal on interest but much less money is made available. This is designed to get them used to managing money and to avoid debt spiralling out of control.

There are a number of things you can do to improve your credit score which are based on the information stored about you by the credit reference agencies.

• Get on the electoral register. This helps money lenders verify your identity.
• Build your credit score – get a credit card for bad credit and never miss a payment. If your history is bad this probably means you will only be offered high interest rates. Be careful with money management, consider every purchase – do you really need it?
• Keep up with any existing repayments. Bank charges, county court judgements and rent arrears all act negatively against you.
• Don’t make several applications for credit you are unlikely to get. Lots of credit searches in a small amount of time makes a creditor think you are desperate for cash and a high risk liability.
• Keep your debt to income ratio low. If your debt payments exceed 35% of your monthly income you will be unlikely to get any sort of loan and you will need to work on paying it off before applying for more credit.

Once you have a credit card, respect it; learn to manage your money! Above all else, keep up with the repayments. If you have any problems, contact your lending company because they might be able to help.