Before you go searching for the perfect deal, make sure you are prepared. The most important factor in getting what you want is your credit score. Also known as a FICO score, your credit score is a number in the range of 500 to 800 that tells lenders how safe or risky it will be to lend you money. This translates directly to the interest rate, perks, and credit limit you can get when applying for a credit card.
What is my credit score?
If you don't know your credit score, there are several websites that can provide you with a report. Typically the charge is around $15 dollars, and some do it for free. Be careful when choosing a free credit report provider, have you ever heard of the term "nothing is free"? That free report might just cost you a lifetime's worth of spam, so consider this alternative:
Next time you are at the bank, tell them you are applying for a credit card and ask what your score is. You might just get an instant answer that doesn't cost you a thing.
If you do opt for a free online credit report, choose a trusted site like Experian.com
Is that a good number?
If you know your credit score, check this list to find out how it will affect your chances of applying and getting approved for a credit card with a good rate:
The Good - 650 and Up: Congratulations, you have great credit. Be sure to keep it that way by paying bills on time and keeping your balance low. You can skip the rest of this article and start shopping for the best deals!
The Bad - 550 to 650: You may be thinking "wait a minute, I thought this was an average score?". Well average credit is fine by itself, and you can probably get approved for most cards. However the end result will probably be a lousy rate, and that's bad. Consider spending a little time to improve your score before applying for a major credit card.
The Ugly - Below 550: Ouch! Don't apply for a credit card with this score. Even if you are approved you could end up paying outrageous rates which could cause further damage to your credit. Don't worry, you can fix it.
How Do I Repair My Credit?
Repairing credit can be done, it just takes a little time. Plan on spending at least a few months to make a difference. Here are a few suggestions:
Monitor Your Credit Score: Bite the bullet and sign up for a credit report and monitoring service from a trusted site like Equifax.com. In addition to tracking your score as you improve, you will be able to pinpoint problem areas.
Dispute Errors: Your credit report may contain errors which are affecting your score. You can file a dispute and sometimes get those bad marks erased.
Fix the problems: Identify which areas are hurting your score and fix them. Late payments on bills? Pay them on time. Outstanding collection notice from 1995? Pay it and make sure your report gets updated. Fixing your credit is like any other repair project - figure out what's wrong and fix it brick by brick.
What if I have no credit?
Having no credit can be frustrating, but everyone has to start somewhere. First make sure that you continue to pay your bills on time. Next you need to start building credit:
Secured Credit Cards: The most common option is to get a secured credit card from your bank.This means you will have to make a cash deposit which will also be your credit limit. Then you will need to use the card and make regular payments. After many months when you have built enough credit history you re-apply.
Department Store Credit Cards: This is a great way to start building credit. Apply for a card at a department store like Macy's or JC Penney. You will almost always be approved, even with no credit history. Make a small purchase right away, and pay the bills as soon as they come in.
Knowing your credit score is critical to getting the best deal when you apply for a credit card. Follow the advice in this article and you will have great credit history before you say "send me junk mail!"
