If you are looking for a Mortgage Advisor to help you through the
financing process, please give us a call at (520) 744-2292 or email Sue
Licensed Mortgage Professional #206048
Fairway Independent Mortgage Corp.
5401 N. Oracle Rd., #101
Tucson, AZ 85704
This year, what’s a better feeling than putting a shiny new credit card in your wallet? Tucson has so many fun things to do and see, it’s nice to have a little spending money. Here are 12 tips for obtaining a credit card and not misusing it.
#1 Know where you stand What credit card interest rate and credit limit you qualify for relies on your credit history. But many people have no clue how good or bad their credit is. To keep the surprises to a minimum, pull your credit report from the three credit reporting agencies. You can get a credit report from each agency every 12 months at AnnualCreditReport.com for no cost.
These reports will show your account history, including things that can hurt your credit score, like habitually late payments, short credit history or high utilization, which is when you've used a large amount of your available credit. The more strikes you have against you, the more likely it is that you won't get the best interest rate.
#2 Improve your chances If
you can wait to apply for a new credit card, spend at least six months
getting your credit affairs in ship shape. Use your credit report as a
First, make sure there is no inaccurate information on your credit
report. If there is, you will need to contact the credit reporting
agency and the company that runs the account to get the record straight.
Next, look at the key factors hurting your credit. If late payments
are a problem, then commit to staying current on all bills. If your
utilization rate is too high, commit money from your monthly budget to
reduce lingering debt as much as you can.
#3 What benefits do you want? Your credit is straightened out, and you want a credit card. Now what? Determine what type of benefits you want.
If you are travel a lot, consider cards that are linked with hotels
or airlines and allow you to rack up rewards points that can be used to
buy flights or hotel stays. For road warriors, there are several
different gas rewards cards available. For those who want to earn cash
from their purchases, issuers have unleashed several types of cash-back
Other perks to consider: cards with low or no balance transfer fees,
cards with low penalty or late fees and specialty cards such as
secured, retail or prepaid cards.
#4 Compare similar cards Consider which credit cards charge an
annual fee. Will a card's rewards cover its annual fee? Would fewer
perks be okay as long as the card has no fee?
Also look at the annual percentage rate, or APR. Is there a special
low introductory rate that increases after six months? Is the interest
rate variable or fixed?
The card with the lowest APR is not necessarily the best for you.
Take into account penalty and late fees, especially if you've been known
to miss payments. And look at other fees, such as balance transfer fees
or foreign transaction fees, which could make the card less attractive.
Also, be sure to read the restrictions on rewards programs. For
frequent-flier cards, there may be blackout dates. Cash-back cards might
have a limit on how much you can earn each month.
#5 Other credit card benefits Some credit cards come with perks
other than their rewards programs, so it pays to read the fine print.
Here are a few benefits you should consider:
• Roadside assistance: Some cards will come to your rescue if
you're stranded on a desolate highway with a flat tire. But there may be
geographical limitations or time-of-day limits. • Purchase
protection: Some cards come with return protection in case a retailer
won't take back a recent purchase. Others offer extended warranties on
top of a manufacturer's warranty or protection against theft or
accidental damage of the item. • Travel assistance: Some credit
cards will coordinate medical care or legal aid if you are traveling
abroad. Others will cover airline fees, such as checked-bag fees, or
offer access to airport lounges. Car rental, travel accident and
trip-cancellation insurance are other popular perks.
#6 Declined? You'll find out why New federal rules that went into
effect last July require creditors to disclose the credit score used to
make a lending decision, along with information related to the score if
a customer is denied or given adverse terms.
The decline notice will provide the credit score, the range of
possible credit scores under the model, up to five things that hurt your
score, the date the credit score was created and the credit reporting
agency that provided it.
Armed with that information, consumers can figure out how most
effectively to raise their credit score by tackling the key reasons the
score was lower. Then, try applying again in six months.
#7 Cards for people with spotty or no credit If your credit is
flawed but you need a credit card right away, you have two choices.
Apply for a secured credit card, or become an authorized user on someone
A secured credit card requires a deposit, usually from $300 to $500,
as collateral to use it. The deposit is put into a savings account,
certificate of deposit, or a money market account. Often, after a year
of good payment history, the issuer may turn the secured card into a
regular credit card.
Another option is to piggyback on someone else's credit card such as
a parent or spouse. They can add you as an authorized user without the
need to qualify you first. The bonus: Most credit bureaus will include
only good payment history on an authorized user's report, which will
help lift your credit score.
#8 Leave a good track record It may be appealing to just pay the
minimum every month because it seems like less money out of your pocket.
But with interest rates between 13 percent and 15 percent, a minimum
payment will only expand what you owe. So the rule of thumb is to spend
only what you can comfortably pay off each month.
Secondly, always pay your bill on time. Set up automatic payments if
you tend to be forgetful. Consistently paying on time is one of the
best ways to boost your credit score, which can make you eligible for
lower interest rates.
Third, mind your credit limit. One of the factors used to calculate a
credit score is how much credit is used versus how much is available to
you, which is called the utilization rate. The lower the utilization
rate, the better your score.
#9 Credit card regulations are your friends There are two big
regulations that cover credit card practices and billing: the Credit
Accountability, Responsibility and Disclosure Act, or CARD Act, and the
Fair Credit Billing Act.
The CARD Act eliminated many common, yet questionable, credit card
practices such as retroactive rate increases, double-cycle billing and
applying payment to lower-rate balances first. It also required more
advance notice for rate hikes and placed caps on fees that issuers can
The Fair Credit Billing Act outlines your rights as a cardholder
when you have a billing dispute with your creditor. For example, it
limits a cardholder's liability for unauthorized charges to $50.
#10 Be virtual friends with your card Many credit card companies
offer special promotions on Facebook, Twitter, Foursquare and other
social media sites to boost cardholder loyalty. Other issuers are using
these forums to address customer service complaints or determine
So if you haven't already, friend or fan your credit card issuer on Facebook, and follow your card on Twitter.
#11 Keep tabs on your credit card A credit card can become a
threat to your financial security if it lands in the wrong hands. Here
are some tips to help keep your credit card safe and sound.
• Check your credit card accounts regularly online, so you can
spot unusual transactions. Set up mobile text alerts if your bank offers
them. • Don't use public computers to make credit card purchases,
access your financial accounts or check the email account where the
bank sends information. Public computers are vulnerable to hackers.
• Avoid unfamiliar online vendors. Stick with established ones. •
Don't give your credit card information to an unsolicited phone caller
or emailer. Always contact your bank using the customer service number
on the back of your card. • If you notice suspicious transactions,
call your local police and your bank. Also, let the three credit
reporting agencies know about possible fraud on your account.
#12 When trouble strikes You might have difficulty paying your
credit card bill someday. If you foresee your financial situation
slipping, here are a few ways to make good on your credit card. First,
contact your creditor and explain your financial situation. In many
cases, the creditor will set up a temporary hardship payment plan until
you get back on your feet. Never stop paying and never ignore collection
calls. Your debt could follow you all the way to court.
Also, consider seeking help from a dependable nonprofit counseling
service. You can locate one through the National Foundation for Credit
Counseling. A counselor can help you reconfigure your household budget
and set up payment plans with creditors.