Have you ever stopped and wondered why your friend who lives across the street receives tons of zero interest balance transfer credit card offers in the mail and meanwhile- you don’t? Card issuers evaluate potential cardholders based upon their credit history, before deciding what deals to dole out.
Know The Score
Lenders look to an individual’s credit score as an indication of their “creditworthiness,” or, in other words, the ability a person has demonstrated to borrow money, pay it back on time and behave in an overall financially responsible manner.
A FICO score ranges anywhere between 350 and 850, and the higher your number, the better off you are. While your credit report won’t reveal your actual credit score per se, it will provide enough information for you to make as educated guess as to where you rank and whether or not a lender might consider you to be a good credit risk.
If you feel the need to know your actual number, you can go online and purchase a peek at your score. However, just be aware that this might not be the exact same number a credit card company looks at when deciding what card to avail you of at what interest rate.
As of July 21, if you have a credit card application declined or are denied an auto loan; you are entitled to a free copy of your FICO credit score under a provision of the Dodd-Frank financial reform law.
Study Your Report
Consumers are allowed one free print out of their credit report per year. Monitoring your credit report is important whether or not you plan on applying for a new credit card. When you get your report, don’t just glance it over and file it away, make certain you really read through it and do the following:
Analyze payment patterns
Have you been making your payments on time? Have you missed one or two here and there? A consistent history of paying your bills on time is the biggest contributing factor towards a high credit score.
Tally Up Inquiries
Every time an inquiry is made as to your credit score, your number suffers a bit in the short term. Inquiries made by banks, such as when you apply for a credit card, are considered “hard” inquiries and will affect your score. Consumer inquiries, like if you were to purchase a copy of your credit score online, are considered “soft” inquiries and don’t reflect negatively upon your number.
Check for Mistakes
Always carefully comb through your report, keeping any eye out for errors. If you notice something suspicious, start making calls to have the mistake fixed and the erroneous blight removed from your credit report ASAP.
Keep abreast of your personal financial business. While simply knowing that your credit report has some not-so-good stuff on it won’t fix the damage that has already been done, making improvements based upon what you learned will go a long way toward increasing your future creditworthiness and availing you of the top credit cards banks have to offer.