If you are new to credit cards and don’t know where to start, there are a couple things you need to understand before going out being ready to apply for a credit card. One thing to always remember is that a credit card is just an extension of the cash you have and/or your debit card or checks. Use it to spend just as you would with these items. Don’t spend money that you do not have and you will be able to reap all of the benefits that comes with utilizing a credit card.
When You Apply For a Credit Card Your Credit Score is the Main Factor
Your credit history and credit score will come into play when you apply for a credit card. This is basically a grade on how well you pay back money that you borrow. When you make a purchase with a credit card you are spending money that you do not have to prove you have. You are spending the credit card companies money and paying them back at the end of each billing cycle. You also have the option to pay back less than what you spent, but you will be charged interest on what is left over. If you do not have a credit history, or have bad credit, then credit card companies will look at you as not being responsible in paying back the money that you borrow, so you most likely will not be approved for a credit card. But, there are still options if this is the case.
Applying For A Credit Card With Bad Credit or No Credit History
If you have bad credit, or no credit at all, and want to apply for a credit card then you still have options. Secured credit cards allow you to get approved for a credit card that you put down an initial deposit for. That deposit will be used in the case that you default and do not pay the money that you have spent. If you are responsible and pay your bill on time and in full each month, then when you are ready to close out your secured credit card account you will have your initial deposit returned to you.
Use a Credit Card To Build Up Your Credit Score
A credit card can be one of the fastest and easiest ways to help build your credit score. It can also be one of the fastest ways to destroy your credit as well. There are some very simple things you need to do after you apply for a credit card and get approved to reap the benefits of raising your credit score.
1. Pay Your Credit Card Bill On Time
This is a must if you want to help build your credit. As long as you pay your bill on time, and hopefully in full to avoid interest, then you will be on your way to increasing your score. Every month that you do so the credit card companies will report to the credit bureaus that you are doing a good job and are a responsible borrower.
2. Stay Under 30% of Your Credit Limit
Your credit card will have a limit on how much money you can spend on it. You want to try and stay under 30% of this number. If your credit card has a limit of $500, then you don’t want to have more than $150 on it at any given time. If you find that you are reaching this number then go ahead and pay some of it off and move on. This way you won’t look desperate for money because you are trying to utilize all of the available credit offered to you. While using a credit card to increase your credit score, it is not about how much money you spend on it, just that you pay back what you do spend and that you pay it back on time.
3. The Longer Your Credit History the Better
Your credit history is just that, a history of how well you have managed the money that you have borrowed. If you just opened your first credit card, or got your first loan, than it will take some time in making payments on time for your credit score to start to increase. If you have had a credit card for a while and cancel your credit card account then the length of your credit history will no longer be increasing. You should try and maximize the length of your credit history as long as possible, keep your account in good standing then you will continue to see your score rise. Even if you are not using your credit card to spend anymore, keep your account open, as long as your credit card does not have an annual fee, and reap the benefits.
4. Credit Card Interest
Interest is the one thing that gets unresponsible people in trouble with credit cards. When your credit card bill becomes due you have the option to pay your bill in full or make at least the minimum payment due. If you do not pay your bill in full then you will be charged interest on what is left over. Basically, you will be paying money to spend money. The interest on credit cards can be quite high and it can cause the total amount that you owe to keep growing until you pay it off. Be sure to pay your bill in full each month to avoid interest and get the most out of the money that you earn.
Now Get Approved When You Apply for the Credit Card You Want and Get The Most Out of It
Now that you know all of the aspects that go into applying for a credit card and using it responsibly you can explore your options and get the credit card you want. If you have bad credit, or no credit, then take a look at secured credit cards as that might be your only option. There are many places to do some research on what is available. A great place to start is the Card Match Tool that is free to use and matches you with targeted credit card offers based on your credit profile. This way you will have an idea on what your possible options are and you are not over reaching for cards you are not likely to qualify for. The Card Match Program will even show you credit card that you are already approved for and all you have to do is apply. If you have bad credit, or no credit history, and you want to apply for an unsecured card and are denied then go ahead and get a secured credit card and use that to start building credit. Applying for multiple cards in a short period of time is hurtful to your credit score, so you want to make sure to get a card that you can be approved for.
You can utilize the offer below to access the Card Match Tool and see what credit cards might available to you.
If you have any question please fill out the contact form above and we would be happy to help out.