How Do I Establish Credit History?
When filling out a credit card application, you may go in thinking that just anyone can get a platinum credit card. While it's true that over 80% of Americans use some type of credit card, not all cards - or credit - is created equal. Establishing a credit history worthy of a premium credit card takes time and effort. There are several key things you need to know before you take the plunge for your first credit card.
Your credit card application will request key information from you, such as residence, amount of rent, social security number and income. The information derived from your application and your credit report will be the determining factors in whether you get a platinum credit card or something different.
There are several things you will need to do to keep your credit history in the best condition before filling out a credit card application.
Make sure that your household bills have been paid on time, along with any other loans that you may have out. Everything from personal and student loans up through rental furniture can reflect poorly on your credit, even if it hasn't been reported as good credit. When you give your personal information on your credit card application, your credit report will show any liens or charged off bills.
Even if you don't think that old cell phone bill or medical bills can hurt, think again. Every delinquent account works against your credit score, making you a higher risk. Platinum credit cards have the best rates, and those with poor credit don't have the premium benefits issued.
You should also pull a copy of your credit report before filling out a credit card application. Make sure that all your information is correct, and have any mistakes fixed. Keeping up with your credit report annually will help ensure that you can avoid having your identity stolen, as well as making sure creditors are reporting things correctly.
When establishing new credit history, the best way to get approved for platinum credit cards is to have mixed credit history. Apply only for credit that you need to use, and mix up the type of payments that you make. Have one credit card line that uses revolving credit, and at least one (preferably paid off) installment loan. This would be a loan such as a car or student loan payment that had fixed payments over a set period of time.
Your income, as well as your debt/income ratio, will also affect your ability to get a platinum credit card when you fill out that credit card application. Make sure that your debt is less than 20-30% of your income so the credit card company will feel secure in your ability to repay the credit.
Once your credit line is open, it's also better if you leave a large balance open, instead of maxing out your card. This shows that you don't need credit, which makes lenders want to offer more credit.
The average age of your open accounts is also a factor. People who open multiple credit cards close together also make you a risk for creditors. When opening too many accounts at the same time, it seems as if there is some emergency being prepared for, and the lenders feel that you may not be able to pay off multiple accounts.
Filling out a credit card application is quick and painless, but establishing your history as a good credit prospect takes time. When done wisely, the platinum credit card you are looking at can become yours, along with the better interest rates, rewards, and higher limits.
Just remember that a platinum credit card is a reward for wise behavior with your credit - not a license to spend wildly. Once you have filled out your credit card application, read the fine print before agreeing to accept the card, and then make sure your payments are on time. This will help you establish a good credit history and good spending habits.
These are all vital steps to making sure you maintain yourself a reputable credit history because when it comes the time when you do need to borrow for significant investments that your previous credit card application steps don’t hold you back, and that any platinum credit card you previously had doesn’t reappear on a credit check at an untimely point in the process. Maintaining a wise approach to these credit card issues will hold you in a much better financial position to make greater choices with your money.