Credit is not just a tool, it’s a product. And according to John Ulzheimer, our resident credit expert, being a smart shopper of credit can be just as important as how you use it once you have it. Here are three things you should before you shop for a new card:
1. Every time you fill out an application for a credit card, you’re giving the lender permission to pull your credit report. Sounds innocuous enough, but each time they pull your report, they leave behind a little breadcrumb in the form of a credit inquiry. The more inquiries you have, the higher the chance some lender somewhere sees you as a higher credit risk. Too many inquiries can lower your credit score and hurt you in the long run, Ulzheimer says.
2. “Lenders hate blank spaces.” The automated systems that read credit applications will assume certain things when you leave something off the form. Ulzheimer cannot stress it enough: fill out the application 100 percent.
3. It’s a no-brainer, but it’s also the key to credit shopping: know thyself! If you don’t know your credit scores, you won’t know if the offers you’re getting are fair or unfair. For instance, if your FICO scores are in the 750-plus range and you’re still getting a bad rate, go to another lender. You wouldn’t know you’re being ripped off if you didn’t know your scores first.
Ulzheimer’s final tip: do all your credit card research first and then apply, not the other way around. If you apply for 10 cards and then choose one, your credit stands a good chance of being damaged in the process. Pick one card to apply for, with terms you are comfortable with, and be done with it.