You’ve just received an attractive credit card offer in the mail, and are thinking of applying for the credit card to take advantage of a 0 percent interest offer or some really great travel perks. Whatever the reason, its a good idea to get your credit in order so you can achieve the best rates and terms. According to European Union law, banks or credit cards must offer at least 51 percent of applicants their best-advertised rate. To ensure you aren’t part of the 49 percent, take the following steps.
1. Check Your Credit Report
When you apply for a credit card, the credit card company pulls your credit score from one or both of the UK credit card reporting bureaus, Experian and Equifax. These bureaus give companies your credit score, which is a combination of factors, including if you have paid your bills on time, how many credit cards you currently have with the balances and how many inquiries you have on your current accounts, among other factors. Your credit score is a reflection on your past purchases and a prediction of how well you will pay off the credit card you are applying for.
While credit-reporting bureaus make efforts to correctly file your information, it is important to review the information to ensure a false report has not been incorrectly filed against your credit card. False and incorrect information can dramatically impact your credit score and should be corrected. If you discover incorrect information, contact the credit bureau and inquire as to the steps for striking the information from your report. This can take several months to adjust, but is worth the wait for the improved terms you can get when applying for a new card.
2. Compare to Ensure You Are Getting the Best Rates
While an initial credit card offer can seem tempting, you should always push to ensure you are receiving the best rate. Websites such as, uSwitch.com allow you to compare a variety of credit card offers based on the deal you are hoping to obtain, such as a 0 balance transfer or a two-year, interest free credit card. Remember that you are viewing the companys best percentage rates and offers for consumers with very high credit scores. If your credit score falls somewhere in the middle or low side, you may not obtain these rates. Keep this in mind before applying for a credit card.
3. Examine Your Motives
Take out a piece of paper and make a list of the current debts you have, from student loans to existing credit cards to auto loans. When you have a quality overview of where you stand in terms of your existing debts, you can evaluate if opening an additional credit card is the right move for you. Keep in mind that a percentage of your credit score is related to how many inquiries you have on your credit. Each time you apply for a credit card, this shows up as an inquiry on your credit. Credit reporting bureaus use inquiries as a portion of your credit score because they indicate if you are credit shopping for multiple credit cards at once as a means to cover debt. In addition to considering your current credit position, think about what you will use the credit card for. If you know you will be able to pay the card off on time and responsibly, it may be the right move for you.
4. Know What Credit Card Companies Like
As part of your application, credit card lenders like to see a history of stability. This means factors like long-term employment history, showing a long time living at one residence you preferably own and a long history banking with the same bank all look good to a lender. If you have these on your side, emphasize them during the application process.
Note that if for some reason you apply and are turned down for a credit card, the credit card company must provide you with a written reason why you were rejected. Read this explanation carefully to determine what you can correct the next time you apply for a credit card. Spending six months or more paying credit cards on time can help you move toward better credit.
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