How do I qualify for a credit card?
You must be 18 years or older, be a citizen or legal resident in the US (or UK),
and have a regular income. The creditor evaluates your situation,
such as income, credit history, and credit score. This information is used
to determine your eligibility for the type of card, the interest rate, and the credit
limits.
Can anyone get a copy of their credit report?
Yes. In fact, the Fair Credit Reporting Act gives you the legal right to
review your credit report. You also have the legal right to have incorrect
information in your credit report corrected.
Through redhotcreditcards.com you can request your own copy of your
credit report.
What is a credit score? When is it bad, when is it good?
Your credit score (also called FICO® score) is a numeric representation of your
financial responsibility, based on your credit history. The value ranges between
300 and 850; the higher the more responsible you are.
The creditor looks at your credit score to see if you are a good risk when
evaluating your credit card application.
To give you a general idea of how these numbers translate see the table
below (note: each creditor may use these numbers differently).
| over 740 : |
excellent |
| 680-739 : |
good |
| 620-679 : |
fair |
| below 620 : |
bad |
How is a credit score calculated?
It is a combination of the following factors:
- Payment history - 35% of the score
- Current credit usage - 30% of the score
- Length of credit history - 15% of the score
- Applications for new credit - 10% of the score
- Total credit types (mortgage, loans, car, etc) - 10% of the score
I have bad credit. Can I still get a credit card?
Yes. It comes at a price, but you can start rebuilding your
credit with a secured credit card (also called debit card).
I was turned down for a credit card. What do I do?
First, ask why you were turned down. Creditors are required to provide you
the specific reason for not issuing you a credit card. Whatever the reason, try to correct
the situation. This usually will take time and involve rebuilding your credit.
Then over time you could re-apply.
What does APR stand for? And what are V and F?
APR stands for Annual Percentage Rate.
It is the interest rate you pay for the outstanding credit card balance.
Be aware that the APR can change. A low fixed (F) rate is usually
preferred over a low variable (V) rate.
If you make a point of alway paying off your balances in full, you will not be
affected by the APR because there are no interest fees.
What is a grace period?
The period between the credit card transaction and the billing date. Usually,
the grace period is between 20 and 30 days during which you pay no
interest -- provided there is no balance carried over from the prior billing cycle.
The credit card company must send your bill at least 14 days before the due
date so you have enough time to pay.
What is a cash advance? Should I use it?
Credit cards offer you a cash advance limit to obtain cash. This can
come in very handy when you have a need for immediate cash. However, cash
advances can be costly because they come with a fee, usually 2-5% of
the money advanced. In addition, you pay interest for which there is no
grace period, so you start accumulating interest as soon as the
money is withdrawn.
What are the fees that I should look for?
They are:
- Annual Fee - applies to all credit cards, but many are $0
- Balance Transfer Fee - for when you transfer balances to your card
- Cash Advance Fee - for when you get a cash advance
- Late Payment Fee - when you're late paying the minimum due
- Over the Limit Fee - for when you exceed your credit limit
I have been approved; how long before I receive my card?
Anywhere between two to four weeks.
What do I do if my credit card has been lost or stolen?
Call your credit card company immediately and tell them what happened. Typically,
the account is closed right away. Once everyting is worked out, you will
receive another credit card with a new number in about three weeks.
It is important that you always keep your credit card number and
issuer's phone number handy so you can call them right away
after losing your card.
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