How Credit Affects Your Chances at Getting a Credit Card

Before one receives a credit card however one must go ahead and apply for it. When you apply for a credit card you are asking the company directly whether or not they trust you enough to give you credit. So how does a company that you have never dealt with before know whether or not to trust you? They know it through the use of your credit report.

Your credit report is a detailed document that not only contains all of your identifying information (home, phone number, other identifying numbers, employment history etc.) but also all of your credit information. It contains information on every single kind of loan you have ever taken in your life and additionally it also has information on your repayment history. Every payment that you have made on time is recorded and likewise every late or completely missed payment will also find its way into your credit report. Credit reports do not just focus on loans but they focus on bills as well. If you are late paying for your phone, internet, television or electricity this information will be in your credit report. Likewise if you have never missed a single bill payment, this sparkling piece of information will also be on your credit report.

So how are your credit report and your credit card application related? Well there are a few ways:

Credit card eligibility: If your credit is really bad (i.e. you have a history of making late payments and you currently have a very large amount of debt) then the company might flat out refuse to do business with you. Likewise if you have really good credit then the company might instead offer you a different deal or even in some cases try to get you to sign multiple contracts.

Interest Rates: This is the big one. The higher the risk the company feels they are taking with you the higher the reward they will want back. The higher the reward they want back the higher the interest rate you will have to pay. This is the most direct connection between your credit card and your credit report. Low risk customers will always benefit from lower interest rates.

Naturally, there are going to be other differences as well. However, most of the time a person’s credit card question is either going to deal with eligibility or interest rates and for this reason it is extremely important that you realize the direct connection that exists between these two topics and the state your credit report currently is in.

Article correct at its author date: March 2007. Copyright Virtual Office Space, Any unauthorised reproduction of this article will be prosecuted to the full extent of the law. Credit Cards Australia.

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