Credit Cards and Credit Scores

We all know about the damage that can be done to your credit rating through misuse of credit cards, whether it be through making late payments or running up debts that can't be serviced and so are defaulted on. However, not all of us have given much thought to what our credit rating actually is and what it means in relation to applying for a card. Of course, if you have a good credit rating your application will probably be accepted, and rejected if you have a bad one, but it's a little more complicated than that, with more shades of grey than that black and white scenario.

Excellent Credit

Firstly, people with excellent credit ratings will never have missed a payment or made one late, will not have already run up high levels of debt, and will have a high income. These, traditionally, are the kind of customers that card issuers have fought to attract, and they can expect to get a card loaded with great features such as cash back, balance transfer deals, and competitively low interest rates.

There are however signs that this might be changing somewhat, with some card companies suspected of ditching these excellent credit rating customers in favour of more risky, yet more profitable, people with sketchier repayment records on whom charges can be levied.

Good Credit

The next group of people is the largest - those with decent but not outstanding credit ratings. These applicants can reasonably expect to be approved for some of the best cards out there even if not for the elite ones which give the best of everything. Comparing cards carefully is important for this group of people, as there will need to be some level of trade off between features and value, so it's important to only get the features you actually need, or you may find you're paying for pointless additions through a higher interest rate.

Impaired Credit

People with generally okay credit histories, but some adverse information such as late payments, may still be able to be approved for some of the better cards out there. They may however find that they're offered a higher interest rate than that featured in the advertisements, or alternatively offered a different card with less features from the same issuer. There should be no problem though in finding a decent card, even if sights need to be set a little lower than the best buy tables.

Poor Credit

People with serious credit difficulties such as defaults or previous bankruptcy might still be able to get approved for a card, although it will have to be one specifically tailored to applicants with very poor credit. These cards will have very high interest rates and will not have any other features to speak of. They do however serve as a useful way of getting back onto the credit ladder and establishing some form of good credit history to counteract previous damage.

Seriously Poor Credit

Even people with the very worst credit scores needn't give up altogether on carrying plastic, although in these cases a prepaid or secured card will be the only option. Although not strictly a credit card at all, at least they offer the convenience of paying by card either in person, online, or by telephone.