Low rate credit cards becoming a rare breed
As low rate credit cards are amongst the most difficult type of card to be accepted for, it is worth looking at how your credit ratings can affect a decision. The "Credit Crunch" is making credit card applications 20% more likely to be rejected than six months ago, and this figure is rising. In the future, credit card companies may even begin to cut back on their low rate cards as they try to make more profit for their shareholders in this difficult time.
If so many credit card applications are being denied, then how can you get accepted for a low rate card? There are some things that you can do to improve your chances. All of these concern what is known as your credit rating. A credit 'rating' is not a score - it is a file listing your credit history. Your credit file contains details of repayments you have made or missed, agreed spending limits and so on. It is this file that is examined by financial service providers when you apply for credit of any sort. Previously rejected applications are recorded as well, and can affect whether you may be accepted for future credit. Too many rejections are not a good sign to financial companies.
When you apply for a credit card the bank offering the card will take a good look at your credit history, more commonly known as your credit 'rating'. The word rating is misleading because it implies a score of some type. Your credit history is a lot more than just a number. Your credit rating is held by three main credit-referencing agencies, specialising in monitoring people's financial 'character'. This report provides information on repayments that you made or missed, your credit limits, when you applied for cards and other relevant information. The decision to issue you with a credit card will depend on the report the credit card company receives from the referencing agencies.
With the current economic downturn, the number of people being approved for low rate credit cards is falling. Whereas in the past credit card companies would overlook minor flaws in a person's credit rating, nowadays they are much less willing to be so forgiving. This means that if you missed a few payments last year you may find yourself being declined, whereas six months ago you may have been accepted. The first thing that you will need to do if you want to apply for a low rate credit card is find out what your credit rating actually is. This is a simple matter of contacting one of the credit reference agencies and asking for a credit report. There is a small fee for this service. When you get your report check it thoroughly, as the referencing agencies are not infallible and mistakes can be made.
If you find that your credit history is less than glowing then don't panic - there are a number of things that you can do to improve it. As credit reference agencies monitor the way you handle credit, the best way to improve it is to deal successfully with other types of credit. For example you can apply for a store card and use it frequently, paying the balance off in full each month. Or you could take out a small loan. You have to prove yourself to be a model customer. As a result, you are more likely to be accepted for other cards in future.
Certainly the number of low rate credit cards is declining. However, they will not die out entirely. If you have set your heart on this type of card then it would be better to start working on your credit rating than applying willy-nilly and potentially damaging your chances of acceptance because of numerous rejections. Consider why you want a low rate card, as there may be something else on the market more suited to your needs. If you want to transfer an existing balance then perhaps a 0% balance transfer card would be better. If you want to make a cash purchase then take a look at the 0% on cash purchase cards instead.
If so many credit card applications are being denied, then how can you get accepted for a low rate card? There are some things that you can do to improve your chances. All of these concern what is known as your credit rating. A credit 'rating' is not a score - it is a file listing your credit history. Your credit file contains details of repayments you have made or missed, agreed spending limits and so on. It is this file that is examined by financial service providers when you apply for credit of any sort. Previously rejected applications are recorded as well, and can affect whether you may be accepted for future credit. Too many rejections are not a good sign to financial companies.
When you apply for a credit card the bank offering the card will take a good look at your credit history, more commonly known as your credit 'rating'. The word rating is misleading because it implies a score of some type. Your credit history is a lot more than just a number. Your credit rating is held by three main credit-referencing agencies, specialising in monitoring people's financial 'character'. This report provides information on repayments that you made or missed, your credit limits, when you applied for cards and other relevant information. The decision to issue you with a credit card will depend on the report the credit card company receives from the referencing agencies.
With the current economic downturn, the number of people being approved for low rate credit cards is falling. Whereas in the past credit card companies would overlook minor flaws in a person's credit rating, nowadays they are much less willing to be so forgiving. This means that if you missed a few payments last year you may find yourself being declined, whereas six months ago you may have been accepted. The first thing that you will need to do if you want to apply for a low rate credit card is find out what your credit rating actually is. This is a simple matter of contacting one of the credit reference agencies and asking for a credit report. There is a small fee for this service. When you get your report check it thoroughly, as the referencing agencies are not infallible and mistakes can be made.
If you find that your credit history is less than glowing then don't panic - there are a number of things that you can do to improve it. As credit reference agencies monitor the way you handle credit, the best way to improve it is to deal successfully with other types of credit. For example you can apply for a store card and use it frequently, paying the balance off in full each month. Or you could take out a small loan. You have to prove yourself to be a model customer. As a result, you are more likely to be accepted for other cards in future.
Certainly the number of low rate credit cards is declining. However, they will not die out entirely. If you have set your heart on this type of card then it would be better to start working on your credit rating than applying willy-nilly and potentially damaging your chances of acceptance because of numerous rejections. Consider why you want a low rate card, as there may be something else on the market more suited to your needs. If you want to transfer an existing balance then perhaps a 0% balance transfer card would be better. If you want to make a cash purchase then take a look at the 0% on cash purchase cards instead.
About the Author:
Sophie Wright has been researching credit cards and the UK Card offers and is keen to create awareness about the offers availble to consumers by using compare credit card sites.
posted by Credit Counseling at
3:17 AM
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