How Do They Decide To Give Me A Credit Card

Category: Finance, Credit.

Many people have questions when they apply for a credit card- which is the best for me?

Why do they need to know all these things about me? How do they decide to give me a credit card? What does it mean to be pre- approved? It s not all that mysterious a process. What could make the card company decide not to give me a credit card? Companies make their decisions based on your credit score, which is derived from your credit report and other information that they may have about you.

Each maintains a separate credit history, and as a general rule, they don t share information with each other. Your credit record is maintained by reporting bureaus- the Big Three are Equifax, Experian and CallCredit. Your credit file may contain may details like: - People on the electoral register at your address. - Details of late payments or defaults on any loans. - CCJs and bankruptcy orders against you. - All your applications for credit. - Other people who share your address. When you apply for a credit card, the company that will issue that card takes your credit report and feeds the information in it into a set of algorithms- mathematical equations- that compare your information with the information about a fictitious ideal customer . The credit reference agency does no more than supply the information on your credit history. That customer has certain traits- a particular wage, a certain number of credit cards, a particular marital status, own a home or rent one, be living there for a certain number of years. The higher your credit rating, the more credit card companies would be pleased to have you as a customer.

The closer your own traits are to that ideal, the higher your credit rating or score will be. Before you apply, it s to your benefit to shop around for the best credit card for you. It s really not true that the worst that can happen is they ll say no. There s another, not- so- obvious consequence to credit card rejections. It is NOT to your benefit to just apply willy- nilly to any credit card offer that strikes your fancy. You might have noticed that one of the things that appears in your credit report is a list of your applications for credit. That s why it s important to shop around before applying- and the best is one that is almost certain to approve your application.

If that list is too long, it will be a negative mark in your credit score, making it harder for you to get the credit card you want. Some reasons your application may be turned down: - You ve applied for a card that targets people with higher credit scores. A reward credit card, often targets those, for instance with the best credit scores. Most companies that issue credit cards have a variety of them- they call them credit products - each aimed at a different market. At a credit card comparison site you can check each credit card offer to see if it is aimed at those with excellent, fair, good, poor or bad credit, and apply for the one that best applies to you. - You don t have any credit history. If you have no history of having paid bills, then the company has no way of judging whether or not you ll pay their account. - You ve not been in your current job or residence long enough. Believe it or not, never having borrowed money before can work against you when you apply for a credit card.

One of the pieces of your credit score puzzle is how stable you are, and that s judged by how long you ve been in your current residence or position. This is one reason to be sure you only apply for the best credit card- the one that you re most likely to be approved for. If it s less than two years, it will be a negative, even if there s a good reason for it. - You ve applied for too many other credit cards and loans. If you ve applied for many credit cards in a six to twelve month period, the credit card companies may see it as a sign that you may be in financial trouble.

Read more...

Remember That Interest Rates Could Vary Across Providers - Finance and Credit Articles:

Most people will agree that having a credit card is a great way to move towards a more responsible and independent way of life. However, if you are convinced that you are responsible enough to use a credit card wisely, you should go in for one.