Lenders use credit scores when someone has applied for credit. Credit scores range from three hundred to eight hundred. Three hundred is poor credit and eight hundred perfect credit. Factors that influence the credit score are:
- Payments both late and on time
- Debt to income ratio
- How long and what type of credit accounts are listed on the report
- Public records
- How many new accounts were opened recently
- How many companies have inquired about your credit
Credit scores are important as this is the major tool that creditors use to decide whether to grant you credit. In some places you cannot rent a home if your credit is poor. It is also determines the interest on the loan you apply for. With poor credit you will pay a higher interest rate if you even get the credit you have applied for.
Credit cards differ from debit cards. When you use a credit card, they turn your purchase into the credit card company who once a month bills you for these purchases. If you are using a card that has no limit and requires payment in full each month then this is not a credit card. It is a charge card. Since it does not keep your spending under control, you could easily find yourself in trouble. You can find yourself with more debt than what you can pay off and It could affect your credit score.
When using a debit card, the money comes out of your account immediately. Any one eighteen and older can apply for a credit card. Whether you receive a credit card depends upon your credit score. With a good credit history, a job, and little debt the company will approve you. If you are just building your credit, the credit card company may give you a card with a credit limit. Once you have shown you are responsible enough, they will raise your credit limit. Being responsible means making all your payment on time.
When choosing a card, you should first look at your spending habits. There are credit cards that will fit all your needs. You should also compare credit card companies. There are ones that offer no interests for a certain period. Then there are those that offer various rewards for using the card. You may even find one that does both. They do not factor the credit card into your credit utilization on your credit report, but the balance is included on total amount of debt.
To get a credit card, you must fill out an application. You can do this online or at a bank. After you fill out the application, the credit card company will run a credit check. Find the one you want and then just fill out the application and you are on your way to receiving a credit card. Making your payments on time will not only allow you to have more credit but will also increase the score on your credit report.