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Learning what to know before applying for a credit card

Pay Attention To What To Know Before Applying For Credit Cards

by / 0 Comments / Mar 01, 2015

Wondering what to know before applying for credit cards? Want a new – or perhaps your very first – credit card? You may be wondering just how to avoid making a mistake, and you’d be right to worry. Here are the three most common credit shopping mistakes I see people make every day, and what you should definitely know before shopping for a credit card:

Shopping passively

The vast majority of people start out their credit life by waiting for credit card offers to arrive in the mail, and then randomly applying for one that seems good. Those marketing letters and advertisements you get in the mail can be helpful because the credit issuers have identified you as a potential customer. With hundreds of cards on the market, however, they’re just the tip of the proverbial iceberg. Want to know what to know before applying for credit cards? Well, look beyond marketing.

Would you buy a car or a house this way? Of course not! You would be active, checking out as many of the available deals as possible, and then narrowing the list to your top choices. Know what to look for when applying for credit, and then go from there.

  • Take the time and use your energy to research the best in class. You may qualify for a far better account than the one that landed in your mailbox. Want to know what to look for when applying for credit card? It varies depending upon your needs. You may just be looking for the least expensive card that fits your credit profile. But if you have good credit then look for rewards.

What to know before Applying for a Credit Card: Avoid Flooding the market

Another no-no is to be overly aggressive with credit applications. When so many cards look great, and you need one now, you’re tempted to apply for a whole slew of them at once.

What to know before applying for a credit card is not to do this! Applying for credit cards can hurt your credit score. Inquiries are not as important as payment history and the amount of debt you have in relation to what you can borrow, but too many in too short a span of time will lower your score. This is particularly true if you don’t have much in your credit history files yet. A rash of hard inquires makes you look desperate and needy, and just as in the dating world, those qualities are not looked upon favorably. Even if you have a fantastic score, it can drop a little

  • Albeit temporarily
  • with a glut of applications. Some creditors might even just decline your application, even with a great score, for the sole reason of too many recent applications.
  • Yes, applying for credit cards hurt credit scores if you do it too much. Only apply for one card at a time. If you get rejected, find out why. Fix the problem and apply again.

Over or under valuing yourself

Just as you would not pursue a job that you not qualified for or for which your skill set is far above the requirements, you shouldn’t apply for a credit card that is beneath or above your level. If the account is designed for people with less stellar credit than yours, you could be charged too much in interest, or the card won’t have the rewards program you deserve. If the card is intended for customers with a higher credit score, you won’t get approved anyway, causing your credit score to be hit with one more inquiry that went nowhere. Make sure you read the terms of the agreement for their qualification standards before you apply. If it’s not clear, call the creditor. It might also be a good idea to look out for websites that share information of the average credit required for the card you intend to apply.

If you haven’t checked your reports in over a year, and your scores in the past month, do so before filling out a single application. This way you can know for sure which products will be a perfect fit.

About the Author

Erica Sandberg is a renowned personal finance editor, advice columnist, and reporter. She hosts her own video program, Making it with Erica, and is a frequent guest on national news shows, from Fox to CNN. Her book, Expecting Money: The Essential Financial Plan for New and Growing Families was the first to address the specific financial needs of new parents. Erica is the spokesperson for some of the finest businesses and products in the U.S., including Western Union, the Better Business Bureau, Bank of America, CVS Pharmacy, Michael Minna Restaurant Group, Bounty paper towels, Chase Card Services, and Assurant Solutions. Prior to her her current journalism career Erica was affiliated with Consumer Credit Counseling Service of San Francisco for ten years.

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