Applying for a credit card is similar to applying for any sort of loan. The lender will take your personal information, income, outgoings and any existing debt into account, including outstanding loans and balances on other credit cards. They will also run a check on your credit history to see if you have had credit problems in the past.

You can check your own credit history through credit references companies such as Experian (www.uk.experian.com) or Equifax (www.equifax.co.uk), for a fee. Depending on the service, you may also be able to query or correct errors on your file that may be preventing you from obtaining credit.

If you have no credit history
If you have never had a credit card or personal loan, you may have no credit history, so you may have limited options as to which credit cards you qualify for. In this instance, the bank where you hold your current account may be the best starting point.

Banks often offer introductory 'student' credit cards with low spending limits and slightly lower interest. However, banks do not often offer the best interest rates.

In order to establish a credit history, you may want to acquire one of these cards but use it sparingly or not at all. After a few months, your credit history may be sufficient for you to apply for a card offering lower interest rates.

If you have poor credit
Bad credit will unquestionably limit your options for choosing a credit card. However, many issuers will consider giving credit cards to people with poor credit under certain conditions. They may offer a higher interest rate and lower spending limit, for example, depending on your specific credit history, or they may offer a card with fewer features, such as a basic card (as opposed to a gold card).

Credit card agreements

Credit card agreements are governed by the Consumer Credit Act 1974. The Act licences lenders and compels them to show buyers the true cost of credit; it also protects consumers against "extortionate" rates of credit.

However, even credit at regular rates can add up quickly. If you are having trouble making repayments on an outstanding balance, contact your credit card issuer immediately.

The earlier you contact the lender, the more likely they are to try to help you meet your repayments. They may suggest a different payment schedule, or an alternate card with a lower interest rate.

But don't leave it too late. Once you have a bad credit record, it is a long and difficult process to improve your standing, and any future credit agreements you wish to enter may be refused.