When should I apply for a credit card?
Credit cards are often applied on impulse or when consumers need a line of credit right away. People don’t realize that there is actually a “right” time to apply for a new credit card. Time and credit go hand in hand, and making a move before the time is right can hurt your credit score and your chances of getting approved for the credit card you want.
Using credit cards can make or break a credit score. Inappropriate spending, too many cards, maximum limits, and late payments can have a serious impact on your financial life. This impact not only affects your current finances, it is likely to affect your personal finances for the next seven years.
Why does time matter
There are several reasons why people apply for a credit card, but if those reasons are impulsive, it can end up making your financial situation worse. Here are some examples of why time is important when applying for a new card:
Credit score status
If you haven’t verified your credit score or checked your credit history before applying for a card, you may have no idea where you are. Even if you think your credit is outstanding, there is a possibility that someone else is using your information for their own benefit. If you plan to apply for a card in the near future, you should request its reports and scores so you know what to expect. Also, it’s important to make sure your score is on par so that you can get your desired credit limit amount.
Thorough investigation
When applying for a new card, you should do it only after checking everything that is available on the market. Too often, people sign mail-in applications simply because they are convenient or look good on the surface. Unfortunately, the wrong credit card can end up costing you too much money and compromising your credit rating. It’s best to take the time to thoroughly evaluate your card options before applying. Compare offers, terms, incentives, and fees before committing to a card.
Recent Applications
One reason the timing of card applications is important is because it is actually a factor in the complex calculation of scores. A consumer credit score will take into account the timing of your credit application. Those who apply for multiple credit cards in a short period of time will lower their score and create a red flag for potential lenders who view too many applications as a risk. If you need to secure more than one credit card, you must wait several months between them. Too many credit inquiries at once will have a negative effect on your credit score.
Financial preparation
Credit cards should never be taken lightly. The only way to ensure that you can commit to using credit cards wisely is to be financially prepared beforehand. This means that each credit card account holder should have a set budget that describes how much the card can spend. Too often, cardholders will overspend simply because they have available credit. Budgeting for expenses is vital to make sure you can pay off the full balance on the card each month. Without a solid financial plan, balances that carry over from month to month will mean that your credit card will cost you more than you can afford. This can be the beginning of a vicious cycle of debt that is difficult to repair.
The bottom line about applying for credit is that it is never wise to apply for a card because you feel like it or because you want one. Take the time to prepare for the responsibilities that come with using and owning your credit card. When you are financially stable and confident that you can use credit to improve your finances, only then is the time to consider your options and start applying for the right card. Review all the terms and conditions of the cards on the market and select the one that best suits your financial needs and spending habits.