Credit card issuers base your interest rates primarily on your credit score. Thus, having a good credit score is essential to ensure you get low credit card percentage rates. Your credit score comprises of five determinants primarily: Your payment history, debt amount, credit age, types of credit used, and new credit. Now, depending on the scoring agency, there are other variables that come into play as well, but these are the major ones. Hence, it is crucial to know what you need to do to excel in all five determinants so you can boost your credit score.
Pay your bills on time
Credit experts always stress that paying your bills on time is essential to have a good credit rating. This is because credit bureaus receive reports regarding your payment history. In fact, even just a single missed payment can greatly damage your credit. So if you want to have low credit card percentage rates, then you better start paying your bills on time.
Maintain a low credit card balance
The higher your balance is, the lower your credit score will be. Hence, you should never keep an outrageous amount of balance if you want low credit card percentage rates. Maintaining a balance, which is significantly lower than your credit limit is optimal for a good credit score. If you charge more than that, you risk getting deductions on your credit score even if you plan to pay it off right away.
The older your credit card is, the better
When you close an old credit card account, the issuing company halts reports to the credit bureaus. After about ten years, the credit bureau will remove the closed account’s history from your credit report thus, shortening your credit age. Consequently, your credit score plummets and you will get higher credit card percentage rates on your next application. Therefore, it is best not to close your old credit card accounts, as it will be a great help in enhancing your credit score. Remember, the older your credit card becomes, the higher your average credit age will be.
Credit card applications
Whenever you take out a credit card application, the issuer pulls your credit report. Such inquiries on your credit report make cause a temporary fluctuation but eventually it should come back to normal.
There are other ways to get low credit card percentage rates but the most effective one is to build a good credit profile. You may get low rates from promotions but this only lasts for a while. However, if you have excellent credit, you can always expect to get low interest rates if you maintain your credit score in good standing.
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