Credit cards: Ensuring a low credit score doesn’t affect your application

A credit card offers you the perfect opportunity and flexibility to make any financial expenditure. Additionally, it offers you the opportunity to borrow funds from the bank or financial institute, wherein which, you can repay it back within a fixed period. However, when it comes to applying for any of the credit cards, there will be certain factors you need to consider. One of these factors includes your credit score. But how does it play a role in your card application?

For one, you might be in for a rude shock, if you find that your application had been rejected, or card rates that are unaffordable. This is where the credit score will come into play.  Your lender will take into consideration your credit score, the basis of which, the appropriate card rates will be provided. If your credit score is low, there is a high chance that your application will be rejected, or you will get card rates that go beyond what you can afford.

While the acceptable limit for a credit score is 650, a score higher than 750 will help you get a better credit card rates. If you think your score is lower than the above-given rates, here are few steps you can take to ensure that your card application is approved right in the beginning:

Check to see if your repayments match: The first factor you need to check is your repayment history of any financial products you have borrowed. In other words, if you have applied for a loan or any other financial products that include borrowed funds, you need to check the repayment history. The reason behind this is that the details of your credit score will come mainly from your lender. If there are any discrepancies in your repayment history, your lender will normally send it to CIBIL. Therefore check to see if your repayment history is matched along with the lender’s to eliminate any possibility of inconsistencies. In the event there are, you can take the appropriate steps to change it.

Repay all current debts: While your repayment history can affect your credit score, so can your current debts. That is because any debt you take on, you will need to have the ability to repay it back. Your credit score indicates the amount of debt you current have, and whether you have repaid it or not. Taking on any additional credit cards is equivalent to taking on additional debt, whether you use it regularly or not. So to improve your chances of getting your card application approved ensure that all your debts are paid off. If you can’t pay off the major debts, ensure that the smaller ones are paid off. Once your debts are paid, ensure that the lender’s system is updated before you begin the application process for the card.

How to use credit cards to boost your low credit score?

Credit cards are a great way to manage your finances, especially if you have multiple expenditures. However, in today’s financial industry, plenty of financial institutes are rejecting credit card application based on the applicant’s poor financial history.

However, all is not lost. Although you may possess a bad credit score, there are ways and means you can still get this credit card. One way to do so is by opting for a secured credit card. A secured credit card is provided to applicants who provide a collateral of equal value. In most cases, it is a termed deposit.

In this case, most banks and financial institutes will offer a credit limit which is up to 85% of the amount stored in the termed deposit. In the event you default on your card payments, the amount in your termed deposit will be seized. During this time, the termed deposit will continue to earn interest like a normally termed deposit.

Who should opt for this credit card?

For those who possess a low credit score or even a low credit history, this card is the best option. Additionally, those who are currently self – employed or unemployed can also opt for this card. Individuals who also do not match the income criteria of certain banks can opt for this type of card. Applicants who also reside in a blacklisted area or address can use this card. This also works for a company that has been blacklisted by banks or financial institutes.

What is the advantage of this type of credit card?

There are plenty of advantages of possessing this type of credit card. They include the following:

• An applicant can use it to improve one’s credit score. By using this credit card on a regular basis with timely repayment, the credit score of an applicant will improve over time
• Bad history is as valuable as no credit history. If you are not part of the credit score system, secured credit cards are your way in. Although possessing a bank account with a debt component will improve your financial profile, a credit card will go a long way. Eventually, you can apply for a loan with the required loan rates you want.
• Although you may put up your termed deposit as collateral, you will still continue to earn interest. In this way, your investment is still secured while improving your financial profile.
• A secured credit card is a better alternative to liquidating your termed deposits in the event you need emergency cash.

You can also increase your credit limit for your credit cards, to a better rate. Depending on the collateral value you provide, you can get a higher rate of credit limit that what a bank would provide you on a normal card.

How to make the most of your credit card rewards

Certain banking cards like the credit card aren’t only designed to make transactions convenient. With the right strategic decision, you can use it to reap valuable rewards and perks. Some of these rewards you will not get with physical cash.

Here are a few tips that will help you make the most of the rewards you generate from your credit card.

Opt for reward credit cards based on your lifestyles

Every individual has different financial requirements. Therefore, a standard reward program would not benefit every individual. In this case, you will need to see how much you spend on different categories. For example, if you shop at a particular retailer, you can use certain credit cards at these places. This is also applicable for online shopping and frequent travelers amongst many other categories. In these cases, you can apply for rewards that will get you extra reward points that can be redeemed for items in the same category. Alternatively, you can also get other forms of rewards such as free hotel stays of companion plane tickets.

Opt for cash back shopping portals

Anytime you shop online, you will earn certain features such as extra points, miles or cash back. What no many individuals don’t know is that your credit card bank has its own shopping portal. Through this, you can start your shopping spree, especially through certain cash back sites. Cash back sites such as Cashkaro, LafaLafa and Gopaisa will offer you great cashback rewards anytime you want to shop.

Know your reward categories

Not many are aware that there are different reward categories for a credit card. As mentioned previously, each individual often possesses a different financial requirement. Therefore, if you are collecting reward points during your expenditures, you must check the different reward point categories you are eligible for. In this way, you can ensure that you get the most of your expenditures in terms of your reward points.

Drop the annual free

Certain reward credit cards often charge annual fees. Credit cards such as the travel reward cards are one such example. Although the benefits of these cards are worth it, it would be double the worth if you manage to waive the annual fee. Do contact you credit card bank to know the ideal process to waive your annual fees.

Apply for a credit card during the biggest bonus periods

It is not uncommon for credit card companies to offer to sign up bonuses to those who are applying for credit cards. These sign-up bonuses can be worth thousands. When you time your credit card application at this time, you can make the most of your bonus sign up, especially against the normal sign up bonus.