If you are taking the time to look for a credit card then it helps to look at your credit report so you can decide what type of card you want and to even find one with the best interest rate. A lot of people make mistakes when applying for a credit card however and this can have a huge impact on both your credit score and even your chances of getting a loan in the future. If you want to avoid all of this then take a look below to find out more.
Your Credit Score
The better your credit score is, the more likely you are to get a better card. If you have a bad score however then this will really limit the choice that you have. A lot of people monitor their credit rating and they do everything they can to get it up, but when they have the card that they want, they let their score slip. This is something that you’ll want to avoid, and you not only need to make sure that you make all of the right payments because you also need to make sure that you keep up to date with any changes to do with your card as well. An increase in your interest rate could bump up your minimum payment amount, and if you do this manually, you may not even realise that you’re hurting your score.
Apply for a Lot of Cards at Once
When you apply for a card, you may be interested in shopping around so that you can get the best deal. If you see more than one card you like, or if you know that you are going to have a problem in getting accepted then you may be tempted to submit more than one application. If you do this then this will really drag your score down, because every time you apply for a card, this leaves a mark on your record and this can even signal to the credit company that you are having financial problems. For this reason, apply for one card at once and always do a check to see how likely you are to get the chosen card.
Spending Too Much
When you first get your card, there is a high chance that you will have a low limit and this is especially the case if you are applying for credit cards for bad credit. When you have a low limit, you may be tempted to spend more than you should. This can increase your credit utilisation score and it can go against you.
For this reason, try and spend as little as you can when you have a low limit. A good benchmark is to try and spend no more than 40% of your total limit, as this will show the credit card company that you are in a good position financially and that you are not spending needlessly. Once your limit has increased, you can then go on to spend more money without it going against you.