A credit card is a financial product that offers numerous benefits when it comes to our daily purchases. It can be used for buying basic and important commodities such as food, gas, and clothing. It is also a great go-to option for when you need to purchase big items like home appliances, furniture, jewelry and more. Besides convenience, credit cards also help a cardholder build credit and earn rewards while spending. Indeed, having a credit card can be advantageous in more ways than one if used responsibly.
Things to remember when applying for your first credit card
If you’re planning to apply for your first credit card, be sure to stay away from these following mistakes.
Taking your credit score for granted
Credit score plays a significant role in determining whether a person will be approved for a credit card. Better credit standing means a better card. If you have stellar credit, you get the chance to have your pick of cards. On the other hand, less than stellar credit may mean very limited card choices or worse, rejection of the application.
Find out how you fare when it comes to your credit standing by checking your credit score. Today, many card companies provide credit score information for free. Take time to check yours before processing your application.
Failing to scrutinize credit card report
Some credit card reports are not 100 percent accurate. Sometimes, the only things that could be hurting your credit are mistakes and erroneous information. This is not unusual, especially when your name is too common or your name usually gets misspelled. Double check the information on your credit report and file a dispute immediately when an error is spotted.
Applying for multiple cards at once
We always want options to choose from when it comes to products and services. It’s the same for credit cards. Maybe you want to get the best deal so you shop around and submit an application to several credit card companies. Before doing so, it’s important to note that your mass card application may do more harm than good. It may send the wrong message and give the impression that you’ve been denied from different applications.
Hard inquiry happens each time you apply for credit and hard inquiries can drag down your credit score. So, instead of applying for multiple cards at once, do it one at a time. If you get rejected once, find out the reason why before applying again.
Treating credit cards as free money
Many first-time cardholders fall into the trap of overspending after getting their first card. They think of their card as free money. Why? Because they know they have a card to rely on when they run out of cash. This does not encourage consumers to think twice before buying an item and is the reason behind overspending. Careful planning and budgeting disappear when one gets a credit card. Be sure not to fall into the same trap.
If there’s one factor that significantly impacts your credit score, it is your payment history. Your payment records account for 35 percent of your score. Be sure not to miss any payment even by an hour. Late payments can take a toll on your credit while prompt payments can help develop good credit. When you make it a point to pay one month of your bill on time, your credit score can increase by 20 points.
Focusing on rewards
One of the things people love about credit cards is the way they can earn rewards while spending. However, focusing too much on rewards may be dangerous. Many credit card companies entice consumers with very lucrative bonuses to make them overlook the interest that comes with the card. And since consumers want to earn as many reward points as possible, they maximize the use of their credit card until they reach a balance they can no longer pay off.
When choosing cards, be sure not to pick based solely on rewards. Always weigh other important factors, especially the interest rates.
A credit card is a helpful tool for making purchases easier and more convenient. Learn how to use it responsibly to make sure it works in your favor.
Ready to get your first credit card? Please visit Calcite Credit Union for more information.