Have you wondered how credit card eligibility is determined? Curious whether you’re eligible for a credit card? It all has to do with your credit rating and credit score. Here we go with a quick tutorial on what constitutes credit-worthiness and how you can make sure that you are eligible for a credit card when you want one.
Credit Reports and Credit Scores
When you buy something on credit or have a credit card, the credit card company or store makes periodic reports to one or more credit reporting agencies. Those agencies keep records of your credit history and how good you are at paying your bills on time. Among the things that go into your credit history are:
1. How many credit cards you have
2. How much you owe on each one
3. How many loans you’ve taken out
4. How much you still owe on them
5. Any payments that you’ve made late
6. Any payments that you’ve missed
7. If you’ve ever defaulted on a loan
8. If you’ve ever filed for bankruptcy
9. If you own a house
10. If there has ever been a judgment against you for unpaid debts
Credit reporting agencies assign a ¡® weight ‘ to each of those facts, and assign points to you based on each of those points. The total of those points is called your ¡®credit score’. The higher your credit score is, the better your credit is.
Some of the things that you lose points on your credit score for are:
1. Having too many credit cards
2. Carrying too much debt on your credit cards
3. Carrying too many loans
4. Making late payments or missing payments
5. Defaulting on a loan
6. Applying for a lot of credit cards in a short time
The credit card and credit score give a ¡®snapshot’ of your credit history.
