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B.I.P Club
Today's Date
September 10, 2010
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Getting the best deals
The process of applying for credit and succeeding in getting the deal you want is more complicated than just filling out a form. For optimal results, the process ought to involve strategic planning and smart management of your existing credit accounts to help you get the right credit card for your
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When to Order Your Credit Report
Before you fill out a single credit application, you might want to start by ordering a copy of your credit report. Because credit reports can sometimes contain inaccuracies, it is important to verify that your record of payments has been reported properly. Ordering your report ahead of time gives you an opportunity to dispute inaccuracies, as well as make adjustments like closing unused credit accounts, prior to having creditors evaluate your credit history.
Checking your report presents also an accurate overview of your debts and responsibilities, and may help you get an idea of what sort of credit card you should be shopping for. If your credit has not been exemplary, maybe a secured card is the way to go. On the other hand, if your credit report is excellent, you'll probably be able to pick and choose among the best rates and terms available.
It's important to know where to shop for credit cards, as simply applying for one card after another may add excessive inquiries to your credit report and make it even more difficult to obtain the credit card you need.
That's because each creditor who reviews your credit report places an inquiry on it, even if they reject your application for credit. Too many inquiries on a credit report can send a negative message to prospective creditors, making them think you might be trying to offset a temporary negative cash-flow situation, or be in the process of overextending yourself.
Shopping for the Best Terms
Trying to find the best credit card deal is a question of research. To avoid excessive inquiries on your report, set the applications aside and first make a comparison of interest rates and annual fees for various credit cards. The Internet is an excellent resource for credit card rates, and comparative data is readily available for free.
If your credit is exemplary, you should find it very easy to obtain cards with a low fixed interest rate and a high credit limit. Be careful to read the terms before applying, so you'll know the terms and fees to which you would be agreeing. Compare the following items for each credit card offer:
- Fees
- Interest Rates
- Rewards
- Penalties
- Billing cycle
Also, because the number of inquiries and late payments on your credit report can affect how low an interest rate you'll be able to receive, send in one application at a time, and be realistic. If two applications have been rejected for a card at a 9.9% fixed rate, perhaps you could try applying for a card with a higher rate, and ask the company to lower that rate at a later date once you've established a positive payment history with them. Another tip is to apply for cards with a lower credit limit that can be increased in the future.
Submitting many applications at once will result in inquiries being added to your credit report. An excessive number of inquiries in a short period of time can lower your credit score, creating a situation in which you may either be denied credit, or denied the favorable terms you might have qualified for prior to the inquiries being recorded. In any case, the creditor is obliged to give you the reason for the rejection of an application, so you will be able to establish an idea of what you can do to make your credit more attractive to other creditors.
Creditors Must Respond to an Application for Credit
According to the Equal Credit Opportunity Act (ECOA), all consumers must be given an equal chance to obtain credit. Creditors are not entitled to discriminate on the basis of sex, marital status, age, race, natural origin, religion, or because you receive public assistance income.
However, creditors are allowed to assess an individual's credit risk based on income, expenses, debt, and credit history. This is the basis on which the decision must be made to grant or deny an application for credit.
You have the right to know whether your application for credit was accepted or rejected within 30 days of filing it. If the creditor rejects the application, they must give you a specific reason immediately, or provide you with those reasons if you ask for them within 60 days. If you have been denied credit on the basis of the contents of a credit report, the creditor is also obliged to provide contact information for the credit bureau that supplied the credit report.
In situations where you have been denied credit because of items listed on your credit report, you are entitled to request a free credit report directly from the bureau that issued the information to the creditor. This may be a different credit bureau than the one from which you usually obtain your credit report, and it is true that the information on your credit report may vary between credit reporting agencies, as different creditors don't always report to all three major credit bureaus.
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