How important is having good credit?

Hoping to apply for a low interest credit card but not sure if you would be eligible?

Millions of individuals get turned away from companies when applying for a credit card due to poor credit history. So how important is having good credit history? Having good credit is very important for many low interest credit cards. Having a bad credit score can mean that a low interest credit card is less likely to be issued to you.

Credit card lenders have found that one of the best indicators of how a person will do with credit in the future is what they have done with it in the past. This is collected by the credit bureaus and used in various metrics, the best known of which is the credit score.

The biggest risk with most credit cards is that the borrower will default, or will need to be carefully managed to avoid a default. Having bad credit is an individual risk however over time it can affect large group of users due to cost. This means that by reducing the amount of card users are likely to default then the credit card issuers are likely to reduce the costs of these credit cards.

Issuers offer low interest credit cards for many reasons however it is fundamentally to attract business and help pay for rewards programs.

This means that in order to obtain a low interest credit card a good credit score would be necessary to prove that you are trustworthy of being a loyal customer.  There are a number of ways to improve a credit score.

One of the most obvious ways of improving a credit score is to access credit records.  These are provided at very low cost by a number of credit bureaus.  If there are discrepancies that are wrong on the credit score then the lender or utility can be contacted and asked to remove the reference on the credit score.  If there is a disagreement and this will not be removed then a note can be added to the file explaining the borrower’s point of view.

Other things to look for are incidents that are more than seven years old. If the credit reference does include this then they can be asked to remove these as they can now be considered redundant.

The other thing that can be done, although this is a long-term matter, is to take out a small loan and repay it diligently and never missing a payment date.  This can do a lot of good to a credit score and open up cheaper forms of credit.