Do you Want a Credit Card? Do This First!
There’s no need to waste your time — and some short-term damage to your credit score — by applying for a credit card offer that’s out of your league. This first step is crucial because the information in your credit reports — and the scores that are calculated as a result — will be critical in determining which cards you get and how much you pay for them.
But be forewarned: Card issuers don’t disclose specific details about their credit score requirements up front. And the credit scores they use are most likely “customized,” which means they are not the same scores that you will see when you request them yourself.
Why, then, should you bother to review your credit reports and scores before you get a credit card if you won’t see what lenders see? There are three good reasons:
Spotting credit report mistakes. The first is that if you do find a mistake on your credit reports that may be affecting your credit scores, you’ll want to dispute it and wait for a correction before you apply. Otherwise you could pay more for your next piece of plastic.
In a recent study of the credit report dispute process, the FTC found that 5.2% of participants experienced a change in their score such that their credit risk tier decreased — meaning they may have qualified for a better rate. In that case they were looking at auto loan rates, but the same principal applies to credit cards.
Where do you stand? The second is that you want to get your credit scores to see what credit tier you fall into. In other words, is your credit excellent, good, fair or poor? The answer to that question will help you avoid applying for credit cards that you aren’t likely to be approved for.
Again, most credit card issuers don’t reveal their credit score minimum requirements, but they may state what type of customer they are looking for when it comes to a particular program.
For example, a search for credit cards shows that many of the cards offering the lowest rates or most generous reward programs are geared to customers with excellent credit, but there are some available to applicants with good credit. There are also cards geared specifically to consumers with poor credit who are trying to get their credit scores back on track.