Financial Education: Charge It Right
Applying for Credit Cards
Paying Your Bill
Keeping a Record
Applying for Credit Cards
The applicant is the person applying for credit, that's you. The
card issuer is the person approving the credit, the creditor.
Individual credit is based on your own assets, income and credit
history. You are responsible for paying the credit card bill.
Joint credit is based on the assets, income and credit history
of both people who apply. Married couples often apply for joint credit. You might
obtain more credit this way. Both applicants are responsible for the credit card
bill, no matter who makes the charges on the credit card.
Another requirement is that you must be 18 years old and have a regular source of
income to qualify for a credit card.
Giving false information about your income or any other item on a credit application
is a crime. It is fraud. You have to demonstrate you are a good risk before credit
is granted. The proof is in your credit report.
A credit report is a collection of credit information. It is how creditors predict
whether you will make regular payments on your loans.
Your credit report is kept on file with three major credit
reporting agencies. Financial institutions report information about
borrowers to the credit reporting agencies who compile information about you, the
consumer. Banks in turn ask the credit reporting agencies for this information when
you apply for a loan.
The three credit reporting agencies are:
P O Box 740241
Atlanta GA 30374-0241
P O Box 949
Allen TX 75013
760 West Sproul Rd P O Box 390
Springfield PA 19064-0390
You can contact any of these three credit reporting agencies to obtain a copy of
your credit report. You might want to get copies of your report from each credit
reporting agency. Each one could have slightly different information since lenders
might not report to all three.
Basic information found in your credit report includes:
Identifying information: This includes your name, Social Security
number, current and previous addresses, telephone number, birth date, current and
previous employers and your spouse's name.
Credit history: This is your account record with different creditors.
It shows how much credit has been extended and how you have repaid it.
Public record information: This includes items that are matters of public record
including collection accounts, bankruptcies, foreclosures, tax liens, civil judgments
and late child support payments.
Inquiries: This is a list that identifies creditors and other authorized
parties who have requested and received your credit report.
Credit history and public record information demonstrate your willingness to repay
How do you think creditors decide whether to offer you credit?
Most credit card issuers use some form of credit scoring to help decide whether
to make a loan.
The score is calculated using a scoring model or a mathematical equation that evaluates
your employment data and payment history. The score is based on information contained
in your credit report.
What should you do if your application for a credit card is turned down?
You will receive a denial notice, sometimes called an adverse action notice , that
lists reasons for denying your application. If you don't receive this notice, ask
your creditor. Reasons for denial might include:
- You have a bad credit history
- You haven't been at your current address or job long enough or
- Your income does not meet the lender's criteria.
Different credit card issuers have different criteria.
If you are denied credit because of information on your credit record, federal law
requires the creditor to give you the name, address and telephone number of the
credit bureau that supplied the information. If you contact the credit bureau within
60 days of receiving the denial, you are entitled to a free copy of your credit
You have a right to dispute any inaccuracy in your credit report with the credit
reporting agency and also with the company that furnished the information to the
credit reporting agency. It is important to review all three credit reporting agencies
to ensure they have correct information.
Let's imagine you have applied for and been approved for a
credit card. The next important responsibility is
paying your credit card