Mistakes to Avoid When Applying for Credit

Whether you’re applying for a new loan or credit card, it’s vital to do whatever you can to increase your chances of achieving new credit. Furthermore, you also want to ensure that your current profile is strong so that you are offered favorable interest rates. Simple mistakes will not only spoil your chances of getting a new credit card, but can make it difficult to climb out of the debt you’re already in.

How to Get New Credit

In order to get new credit through a loan or credit card, it’s important to keep your credit score as high as possible. Even if you have a lot of debt, simply staying on top of your payments will ensure that your credit score remains relatively healthy. Remember, gone are the days when credit cards would grant a new card to candidates with low scores. Now, lenders are more cautious about offering credit. By properly managing your existing debt, you’ll prove yourself a worthy candidate of more credit.

Be sure to avoid mistakes such as:

Applying for multiple cards or loans. Each time a lender checks your credit score to determine whether or not they should extend an offer to you, your credit score suffers. Even if you’re simply shopping around for the best deal, the more times your score is investigated, the more points are taken off. While it’s normal to seek the best deal possible, avoid applying for five or six different credit cards or loans.

Missing a payment. Even if your debt is unbearable, it’s better to make a partial payment than to miss it altogether. Furthermore, if you know that you’re going to struggle to pay back your debt, then begin taking action now! The more payments you miss, then the more points are taken off your score, which lowers your chances of receiving new credit.

Using too much credit. Remember, the credit companies compare your outstanding debt to the credit available to you. Your credit utilization ratio composes 30 percent of your credit score, and using too much will lower it.