The Significance of Credit Cards & Loans
Everyone probably wanted a credit card at least once in their lifetime. Once you open your first bank account or around the age of 18, the opportunities to build credit is very exciting. Actually, most young adults do not care about credit building. We cared about the free money! All of the knowledge and fine print associated with credit cards can be confusing, despite the easy way that it’s promoted and advertised to you. It’s difficult to dismiss a pre-approval invitation of free money, especially when you are only 18, 19 or 20 years old.
When I was 18 and in college, my parents funded me with a secured credit card. They deposited $100–200 each month onto a prepaid credit card, for me to spend while I was living on campus. So, I started off using credit cards in a limited fashion unlike most teenagers and young adults. Credit cards are very helpful, but they can also be very risky because you are promising to pay back something in the future, which you may or may not have. When that promise is broken, you are charged interest and late fees on what you borrowed. Missed payments lead to negative marks on your credit report and this can prevent you from getting approvals in the future. Although a lot of people opt out of of the usage of credit cards due to bad experiences, lifestyle preferences, etc, credit card transactions are an essential component to the growth of the economy.
Significance of credit cards
It’s important to understand that wonderful opportunities are often too good to be true. There is always another perspective, another way of looking at something that imperfect its value. Although credit cards and loans offer free money for a duration of time, you usually have to pay the money back. The blessing in this is that you can receive support for a future expectation. If this was not possible, then most businesses probably would not even exist. Imagine if everyone was forced to use the money which they currently only had to pay for everything? This means that you would have to dip into your savings account every time you wanted to treat yourself outside of your regular expenses. It would be difficult to save money then. Instead you can purchase the item on credit and then pay it back with your next paycheck. Worst case scenario, if you can’t pay the bill with your next paycheck, then you can dip into your savings to cover the damage. End of the day, credit cards give others the opportunity to move beyond their limits while building a reputation or status for themselves.
How to get approvals
Approvals are what we want to get, but it’s not always honored to us. Credit cards work just like any other application. There are standards and criteria that should be met before applying. You are more likely to be approved for credit cards and loans that you have already been pre-approved or pre-qualified for, yet approval still is not guaranteed.
It’s important to take your time throughout the process of applying for a new credit card or loan. If you’re not in the right mindset of attending to details and having some patience, then you can be wasting your time.
As previously stated above, there is criteria to be met, not luck. Luck will probably make you have to pay much more money in the future, and maybe that works for some desperate people. For those who are serious about building status, taking your time to read will go a long way.
Most credit cards have a preferred score range, or credit criteria. Some credit cards are for people who have low or poor credit. Others are for people that have fair or good credit, and then there are cards for those who have excellent credit. You can look up the ranges for these categories easily online.
There are 2 main credit score models that these credit card companies and lenders use, which are the FICO and Vantage models. They both range from 300–850. It’s also important to understand that there are also credit cards for people with little to no credit. This is different from credit cards for people with bad credit. With that being said, it’s best to look up the preferred credit score range for the card or loan that you’re interested in applying for. This prevents you from wasting your time, and applying for something outside of your standards. If you don’t meet the standards, this should help motivate you to improve you credit score so that one day, you do meet the criteria to be approved. Regardless, its better to apply for anything which you meet the criteria, so apply for credit cards and loans that fit your current credit score.
Why you were not approved
There are so many factors that go into credit card and loan approvals. You can even have the qualified credit score range, but other negative marks on your report can jeopardize potential for approval. Negative marks can include late or missed payments, collections, settlements, etc. It’s important to not give up and lose hope. Always remember that you have options, such as secured credit cards. Secured credit cards allow you to put down a deposit fee to set your credit limit. This helps you build credit and help to improve your credit score over time so that you can apply for unsecured credit cards and be approved in the future. If you want to learn more about credit cards and borrowing money, never feel shy to do some research or experience it out for yourself.
