Following the old adage, “Beauty is in the eye of the beholder,” there is no one set formula for qualifying for the top credit card interest rates. Each bank and credit card issuer establishes its own criteria for credit qualification with a range of acceptable credit scores.
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In today’s marketplace, there is a wide variety of available credit card interest rates. Current APRs for variable interest rate credit cards range from a low of 9.99% to a high of 29.99%! This does not take into account so-called teaser or introductory interest rates as low as 0%.
The best rates are not attached to credit cards that feature instant approval and follow minimal qualifying procedures. For the absolute best rates, applicants will generally go through a complete and thorough credit review.
General Credit Card Qualifying Criteria
According the Fashionviewz, credit cards are easy to obtain as long as you meet the lender’s principle qualifying guidelines.
Lenders look first at an applicant’s payment history. Any late payments that are reported to the major credit bureaus will reflect badly on an individual’s credit. At the very least, applicants are often required to provide an explanation for even one 30 day late payment.
Several 30 day or 60 day delinquencies will significantly reduce your chances for that bank’s top interest rate credit card. They may still offer you credit, but at sharply higher rates.
The next factor a bank will consider is how well an applicant manages their outstanding debt. If an applicant has a number of credit cards that are all maxed out, lenders are unlikely to extend new credit.
In recent years, many Americans have extended their credit beyond their ability to equitably manage and eventually pay off their debt. If you are currently living beyond your means, it is improbable that you will qualify for a new credit card at the best rates.
Banks and credit card issuers also look at their applicants’ financial stability. Applicants who are top professionals with stable long-term employment prospects are assured of preferential treatment when applying for new credit cards.
Lenders also rate applicants based on the number of times they have applied for credit in the recent past. A credit report showing numerous inquiries for new credit is a sign that the applicant may be a poor credit risk. Inquires remain on your credit history for 24 months.
Even credit cards that sit in a drawer and are never used can hurt your chances when applying for a new card. Sometimes it is better to close credit card accounts that aren’t being used. Once closed, ask the credit bureau to remove these unwanted cards from your credit report.
FICO Credit Scores
The FICO credit reporting system, developed by the Fair Isaac Corporation, has become the benchmark for ranking consumers’ use of credit in the United States. The FICO model takes into account the timeliness of credit payments and the amount of outstanding credit, counting for about two thirds of the rating formula.
Other FICO criteria include the kinds of credit utilized and the overall length of an individual’s credit history. Once a consumer is evaluated, a score is assigned between 300 and 850 points. According to the Moolanamy website, an excellent credit score is 740 points and above.
Good credit scores range between 680 and 739 points. 620 to 679 points on the FICO chart are considered average credit scores. A score of 560 to 619 points indicates an applicant has poor credit. Anything below the 560-point level is universally accepted as bad credit.
Good Credit Scores Alone Are Not Enough
Other factors besides a FICO credit score will also be considered when applying for premium credit card accounts. Lenders want to see a good mix of credit obligations, a home loan, auto loan, a student or business loan, and not just a bunch of outstanding credit card accounts.
Consumers should obtain a current credit report at least once each year to see how they stack up, to fix any potential problems, and correct any errors that might appear. If you are turned down for a top credit card account, it could be that something has changed since your last credit report.
Fixed rate credit cards have pretty much fallen by the wayside in the economic upheaval of the last several years. Today’s consumers are looking for the best starting interest rate, lowest margin and most stable index value when shopping for a new credit card.
Points, cash back, and other rewards devices are also sought after credit card programs. The prestige that comes from travel rewards and other premium credit card benefits will also motivate creditworthy consumers to shop for the best deals!
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