If you're new to the world of personal finance (say, for instance, you've just crossed the age threshold for getting credit or have never considered taking out a credit card or loan before) then trying to get credit can seem like a rather daunting process. To be fair, we don't blame you for thinking that - borrowing money is quite a big deal if you've never done it before, so it's understandable that you might be cautious. Fact is though, there really is only one way of actually getting credit: you've got to apply for it!

The question, however, is where you go to make your application, but that's really dependent on what kind of credit you're looking for. Mention credit in general and most people immediately think of credit cards, which are certainly one of the easiest and most flexible forms of credit around - you can spend when you want, pay back as much as you'd like (within reason, of course!) and keep it going for as long as you're able to use it responsibly. Being easy to arrange, however, it's no surprise that credit cards tend to have higher rates of interest than other forms of credit. They also require a credit check to be carried out before you can get one, so you may struggle to be accepted if you have a bad credit rating (although there are a select number of cards designed for people with bad credit, so it's not impossible to get one so long as you don't mind paying an APR of between 35 and 40%).

After that, you've got top rated installment loans - they might seem more 'grown up' than a credit card, but there's just as easy to apply for. If you've got a clean credit rating with no slip-ups in the past, then getting a loan is as simple as going to your bank or building society and applying for one, which is good since bigger lenders like banks tend to have the best rates available. Bizarrely, the same can also be said for many of the big supermarket chains who have also started offering loans in the last decade; although you'd never think of going to the supermarket to take out a loan, many of them can offer products that compete strongly with the mainstream ones that banks offer. Be sure to check out what the likes of Tesco, Sainsburys, Asda and even Marks & Spenser are offering, just in case they can beat out any deals you've been shown by your bank!

If, however, you've had financial problems in the past like County Court Judgements (CCJs) or missed payments on bills, then you might find it harder to get a traditional loan due to your credit rating having bad credit on it. It might equally be difficult to get a bank loan if you've never had credit before, since your credit record will be so blank that lenders will have no idea if you can handle money responsibly or not! In both cases, you may be better off finding a specialist trusted installment loans for bad credit provider willing to handle your bad (or lack of) credit; there are plenty to choose from throughout the UK, although all will usually charge higher rates of interest on any reputable installment loan companies they give due to the bad or unproven nature of your credit history.

There's also the matter of financing, which is usually provided when making a big purchase such as a car, a kitchen or other home improvements. These are essentially just loans but with a specific purpose taken out through whoever you're buying something from; they'll have lenders attached willing to provide the money, although credit checks will invariably be required before an application is approved. In the case of people with bad or no credit, it may be more suitable to arrange the financing elsewhere with a more flexible lender, although this again will incur a higher rate of interest than a regular financing agreement would.

Regardless of which type of credit you need though, there's one rule you always need to follow - be sure to shop around. While you'll undoubtedly get many people all promising you the best possible credit rates, the only way to actually find the perfect credit for what you need is to do your research and compare many different credit companies against one another. You could do this yourself (although it'll take you a while and might not even take every company into account) or you can approach a credit broker, who'll do all the legwork and then deliver a wide range of credit options suited to your requirements.

In Summary

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Copyright: Individual Finance, 2010

Martin Mathers writes for Individual Finance -- he's a professional journalist and writer with 12 years of experience under his belt, covering everything from finance and business to movies, music and technology.

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