Negotiating For Better Credit Card Terms

01/14/09

If you have a poor credit history, you may have already realized how hard it is to get a good rate on credit cards. Failure to pay credit card debt or even consistently making late payments, contributes to a poor credit history resulting and in you receiving a negative rating from the credit bureaus. Regardless of whether the late payments are the result of negligence or a lack of funds, the low credit score that results will make it difficult for you to get a credit card.

So how do you get a credit card if you have a bad credit standing? The obvious solution would be to raise your credit score to a more favorable level. It is fairly common knowledge that people who have higher credit scores stand a better chance of being given credit cards with good terms than people who have less than ideal credit scores. In addition, having a high credit rating will also make you eligible for lower interest payments on your mortgage and car loans.

Some of the ways by which you can increase your credit score are outlined below.

Check for any errors in your credit report and correct them. You should check all your credit reports for any errors, since any mistakes present can result in you having a low credit rating. You should look into this as early as possible, since correcting any mistakes in your credit report is a process than can take a long time.

Pay your bills on time. Most credit card companies will take a close look at your history of payment in order to determine your eligibility for a credit card with better terms. Even if you have only missed one credit card payment in the past, your credit rating may be affected adversely. Paying your bills on time is the single best thing you can do to raise your credit rating.

Pay off the balance on your credit card Another thing that can affect your chances of getting a credit card with good terms is the ratio of your credit balance compared to your credit limit. If you are interested in raising your credit score, keeping your balance below 25 percent of your credit limit is a good way to do just that.

Keep old accounts open There was a time when the best option with regard to old accounts was to simply close them. The change in the way that credit ratings are calculated however has made it more feasible to keep older accounts open, thereby increasing your credit score. Closing old accounts will actually have a detrimental effect in that it will shorten the length of your credit history, thereby decreasing your available credit, as well as increase the ratio of your credit balance in relation to your credit score. While closing your old accounts will only lower your credit score slightly, keeping them open may just spell the difference between being approved or rejected for a credit card with better terms.