Credit ratings are a always a factor in the credit application process. When applying for credit cards, the credit ratingis one of the most important factors on whether a amount of credit will be granted, and in the case of credit card applications what the annual interest rate and credit limit will be. Credit cards can also both positively and negatively affect credit ratings. Credit ratings affect more than credit cards they have implications for all other credit products such as lines of credit, home loans and personal loans. As well as credit the credit ratings can also affect whether tenancies can be taken out, insurance granted or jobs given. Credit ratings are becoming more important every day.
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A credit rating is the history that credit bureaus have collected on a person based on number of factors, which largely focusses on their past behaviour towards credit.
The amount of applications for credit cards that a borrower makes, particularly when made within succession of each other can have a negative impact on the credit rating itself. The implication of frequent applications for credit is that the applicant may be desperate to borrow money as they are in, or soon to be in financial trouble. For this reason one who is applying for multiple credit cards within a short period of time often raises red flags to the potential lenders. This is the case even if the applicant has applied for multile cards just to speed up the approval process. Thus one is better advised to apply online for an instant approval credit card to get an immediate response than risk tainting their credit rating by making multiple credit applications.
The ratio of credit being used is a very important factor. If the credit that is offered is almost entirely taken up then this can cause bad marks on a credit score. For example If you have a $4000.00 balance on a card with a $8000.00 limit you are using half of your potential and this is around the maximum you want in order to maintain an impeccable credit rating. A balance of $4,000.00 on a credit card with a $12,000.00 credit limit is a much healthier proportion. The bottom line is the lower the debt credit ratio is the better the credit rating figure will be. In this way lowering the ratio and improving your credit rating can be as simple as requesting a higher credit limit.
