Tips Before Applying For A Credit Card

Credit cards are attractive. They allow you to make purchases today and pay for them later. And like loans, using credit cards helps you build your credit history. Applying for a credit card is somewhat like applying for a loan; some thought needs to be given to the process to make sure you get the best deal that meets your needs before you jump in. Remember to consider the following before you apply: It affects your credit score.

Whenever you apply for a credit card an inquiry appears on your credit report. Too many inquiries in a short period of time can bring down your score by as much as 10 to 20 points depending on your particular credit history. It might cost you. If you apply for credit cards without doing your homework, it can cost you a pretty penny. For example, say you apply for a credit card with a processing fee of $99 and an annual fee of $50. Just by applying and being accepted for that card, you’re paying almost $150 without even having made any purchases!

What will you use the credit card for? Make sure you know how you will use your credit card and what you will purchase with it before you apply. Keep in mind that every time you use the card, you incur debt that you will have to repay, with interest. You need to shop around. Before you apply for a card, ask what interest rates and credit limit you qualify for and shop around for the best possible deal. You want to look for the best option before committing yourself to any certain card.

Make sure you understand the terms. Before applying for and accepting a card, make sure you understand the terms and conditions of the plan. Read the fine print. Ask yourself whether you are able to afford the card. What are the rules for the card and are there frees for breaking these rules. Pre-approved credit cards can be tricky. Pre-approved offers tell you that the credit card company has looked at your credit report and determined that you might qualify for the interest rates and credit limit being offered. However, whether you will really get the best rates depends on your income, employment, and credit history. It is therefore important that you read the credit agreement carefully before you sign on the dotted line - there may be limitations or conditions that are not obvious in the advertisement.

TIP: Before you apply for credit, get a copy of your credit reports at www.annualcreditreport.com. Look them over carefully. Mistakes are common on credit repots, and it can take only one mistake to cause a credit card or loan rejection. If you do find an error, take the steps necessary to have it removed.

This entry was posted on Tuesday, October 30th, 2007 and is filed under Credit Card Applications, Credit Cards. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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How Credit Scores Affect Mortgage Applications

With a good credit score an applicant will receive prompt response from many lenders, all of them offering low interest rates and low down payment options. The loan amount offered also may be high. On the contrary a low credit score would result in a lot of rejection from various mortgage financers. Because creditors wouldn’t come forward easily to give credit to individuals that have a history of difficulty in repaying existing loans. After all, creditors take risk when they finance mortgages against the credit history of a debtor. Naturally, they will wish to remain on the safe side and pick up less risky ones that have good credit histories. A good credit score means less chance of missing on payments and therefore less risky.

But there are some real risk takers that will come forward to finance mortgages for individuals with bad credit scores. They would charge high down payments and always high interest rates though. They may also fix additional charges for every little paper work and may charge high closing rates. The loan amount offered will also be considerably less. The individual with poor credit scores will not have much choice but to accept the terms and conditions as there are no other alternatives. This is a tight situation and to avoid this you must have a good credit score.

People with bad credit may fall in to the trap of ’secured loans’. Secured loans are the ones where the loan applicant offers an asset as collateral security. The lender becomes secure about the repayment of the loan and not the borrower. Securing a loan with bad credit score becomes easy only when the applicant is willing to offer some asset as collateral security. This again is a very dangerous situation where an individual runs the risk of losing his entire collateral asset in case of failing to pay the loan installments in time. An individual should always avoid such type of a loan.

Resort properties normally require large amounts of finance which a person with bad credit may find it difficult to obtain. So it is always advisable to keep your credit score high. Incase the credit score becomes low due to unavoidable financial reasons it can be improved upon. There is no need to lose hope simply because a person has a low credit score. If the property that he intends to buy has good equity he should go out and try to obtain finances for it. There are many sub prime lenders willing to offer their services.

For a review of your credit report as it relates to a mortgage loan and a consultation on the best loans available to you, give us a confidential, no obligation and no cost call.