Credit Cards Articles


Better Credit Record, Better Chances for Unsecured Credit Card

It always pays to maintain a good credit record. Needless to say, a good credit record keeps you in good standing with the credit card companies, and they will be more accommodating with you. But more than that, having a high credit score can bring other benefits -- like getting lower interest rates on loans, and getting more easily approved on your applications for housing loans, car loans, and other offers. Some even say, although there are those who contest it, that having a good credit standing can even be of help in applying for a job and other non-credit-related uses.



Delinquent Card Holders Have Little or No Chance

Among those who usually apply for unsecured credit cards are students. But even for them, or for any applicant for that matter, those with high credit scores stand the best chance of being approved. Card holders with a poor credit history, meaning those who are irresponsible in their use and delinquent in their payments, will more likely be disapproved in their applications, whether for secured or unsecured credit cards.

With unsecured credit cards, card holders can use as much as the entire amount of the approved credit limit. That is why more people would rather apply for an unsecured credit card. But the credit limit that the credit card company will issue will depend a lot not only on your capacity to pay (meaning the amount and regularity of your income, among other criteria), but also on your past record as a credit card holder -- how good (or bad) you are in paying, including the promptness of your payments.

Applicants with a bad credit history will have a small chance of being issued an unsecured credit card, and if they do get a card, most likely, they will be given only a small credit limit. They must first increase their credit scores on the use of their current cards to prove that they deserve to be issued an unsecured credit card and to be given a high credit limit.

The reason for the more stringent requirements for the screening of unsecured credit card applicants is that, with unsecured credit cards, the credit company is taking more risks because it is like the company is lending you money or advancing the amount that you will be spending with the use of the card. Applicants for unsecured credit card must be aware, however, that, for the very same reason that the company is assuming a greater risk, higher interest rates are charged for unsecured credit cards.