Credit Cards Criteria and Best Use of Credit Cards

Credit cards are small plastic cards that can give you financial flexibility. There are different types of credit cards that are issued by financial companies. Examples of these are business credit cards, student credit cards, and secured credit cards, among others. But before somebody gets approved for a card, a series of background check is performed first. And all credit card companies, including those providing online credit cards, use them.

Criteria Used in Issuing a Credit Card

  1. Creditworthiness.
    Creditworthiness corresponds to a person’s good credit history. Now creditworthiness also means that a person had good performance with his previous loans and was able to meet all his financial obligations with ease. Consequently, those with poor credit scores will experience difficulty in being approved for a credit card.
  2. Job.
    Before a credit card is approved, a person has to prove that he is financially stable. This also means that he has a good job, preferably from a reputable company. He should also be earning enough to pay up his credit card’s revolving balance.
  3. Link to parents card.
    This is especially true with student credit cards. College students certainly have the need for funds to be used as their living expenses during their stay inside university dormitories. Even if students don’t have a steady job yet, they are approved for a credit card for as long as it is applied under their parent’s name.
  4. Verifiability.
    This means that the personal data of a person, which includes but is not limited to, his residential and business address, social security number, contact numbers, and credit history, are correct and confirmable. This gives financial institutions the ease of getting in touch with the credit card holder should problems arise.

How a Credit Card Should Be Used

  1. Always pay your bill on time.
    If you fail to pay your bill on time, you will be charged a late payment fee. And these fees could really come high. Most credit cards companies charge as much as $30 if you miss your deadline or if you can’t pay the minimum amount required at least. Not only that these charges add to your expenses. It will also cause a dent on your credit history.
  2. Try to pay your credit card bills in full.
    If you always pay in full, you will actually make a credit card company pay you back for using their card instead of the other way around. On the other hand, if you choose to pay only the minimum amount every time, it would take you several years before you can fully pay your debt.
  1. Use credit cards during emergencies only.
    Instances like being are short on cash is a good reason to use your credit card. But then again, you should use it for the most important needs only. This way, you won’t end up paying for things you don’t really need.
  2. Charge what you can pay.
    Credit card companies usually give big credit lines to people who have good credit standing. But even though that’s the case, make sure you use only the part that you can certainly pay off. If you want to buy a big-ticket item using your card, inquire about deferred payments or installment plans. Avail of them if those are available.

Problems That Could Arise Out of Using Credit Cards

If you over use your credit card and end up unable to pay your bills, here are the possible consequences of your action:

  1. Higher interest rates.
    Next time around, your credit card company will bill you with much higher interest rate as a result of late and irregular payments. The best credit cards out there have low interest rates and no annual fees. But if you fail to be a good payer, then you won’t be enjoying those kinds of visa credit cards for a long time.
  2. Bad credit score.
    Aside from paying higher interest rates, you will also suffer from a bad credit score. Repairing a bad credit score is real hard. And even if you manage to do that, a record that incident will remain in your files for a long time.
  3. Low approval rate.
    Credit cards have expiry dates. And if you have are encountering problems with the ones that you own, chances are it won’t get renewed anymore. The chances of getting approved for a new card, whether with other credit card companies or not, is very low.

Once you become a bona fide credit card holder, a set of unconscious responsibility is passed to you. You have to know the proper way of using credit cards, no matter if those are business credit cards or otherwise. Doing so will retain your credit rating and worthiness. So if you’re ready, apply for credit cards today.

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