When you apply for a credit card, the lender does a credit check to how risky the extension of credit is going to be. There has to be a standard of risk that the lender is going to be willing to accept. Among the things you can count on being checked are your credit history, income, job history, current debt, how long you’ve lived in your residence, whether you own your own home, how many times you’ve applied for credit, and possibly if you have tax liens or judgments filed against you. All of these factors can be listed on your personal credit report and along with your credit score (the numerical value of your credit worthiness) the lender will determine if and how much credit they want to extend to you.
In today’s world, there is a credit card available for just about everybody. You are going to find yourself pummeled with credit card offers at some point or other. This is especially true for students. This is where patience, research, and common sense should come into play. Never choose the first credit card offer that comes across the table. Set a standard by what you’re willing to allow yourself to be charged in interest. After all, this is money that will be coming out of your pocket. This means getting in the habit of reading the fine print of the offer.
Some companies offer low to zero interest but this usually for a set period of time from one month to one year. Read the fine print so you don’t wind up with a zero interest credit card that suddenly charges you 18% interest.
It’s also very important to note that if you apply for too many cards at the same time, this can put a negative light on your credit report. Each lender that checks your credit generates a line on your credit report called an inquiry. You will end up getting rejections if you apply for card after card.
If you have no credit or a bad credit rating, the best card to apply for is the unsecured credit card. Getting this card and making your payments on time signals that you’re a good money manager and responsible with your financial matters. This is a great way to establish credit or begin rebuilding your credit. More often than not, once you’ve established that you’re a good credit risk, you might be given the option of an unsecured credit card with a much higher spending balance.
Knowledge is the key and understanding the credit game will save you a lot of time and money over the long period. Remember, that many people are in debt because they have a good number of credit cards with high balances. One personal financial disaster can leave you seriously in debt. Once you get your credit card, use it wisely and never use the credit card to pay for anything you can write a check for. Remember that legitimate credit card companies are not going to ask you for money up front. Never apply for credit cards you don’t need.
Use these tips to understand the application process and use your credit wisely.
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