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Choosing a Credit Card: The Basics
The first thing you’ll want to do when choosing a credit card is to evaluate your options. Rather than signing up for the first credit card that appears in your mailbox, save up the offers that appear for a month or two.

Evaluate the credit card offers you’ve received, realizing not all credit card offers are equal. You’ll want to take notes on how the offers differ, so you can be sure you are choosing the credit card that offers the best interest rates and lowest fees. You also want to make sure that the offer is optimal for your situation. Use a highlighter to highlight any terms or conditions that concern you. Read the fine print. Call the credit card company and speak to someone in customer service if you don’t understand something in the contract.

If you are a new creditor (either a young person just starting out, or perhaps you have never held credit cards in your name before), you may have to start with either a secured credit card or a credit card with a high interest rate. The options available to you will depend on your credit history. If you establish a good credit history through wise use of your first card, you can choose an unsecured credit card with a better interest rate, higher credit limit and lower fees later.

When choosing a credit card, you’ll often come across the term “pre-approved.” People mistakenly assume that because the offer says they are pre-approved, they will get the credit card offered. This only means the credit card’s initial information about you indicates you should be in their accepted credit rating bracket. The credit card company will still perform a thorough credit check before they approve your application, should you choose their credit card.

What to Look For When Choosing a Credit Card
Look for the best interest rate available. Check to make sure the interest rate on the credit card you are choosing does not change over time. If it does change, make sure you can absorb the increase in interest or will be able to pay off the balance each month so the interest rate hike will not adversely affect you.

Check the credit limit. Choose a card with a high credit limit and then use only half of that limit. This maximizes your credit health rating with the credit bureaus.

Choose a major credit card with a known name. Major credit cards such as Visa, MasterCard, Discovery and American Express all hold more weight with credit bureaus and other lenders than the lesser-known cards and department store cards. Responsible use of a major credit card (never maxing out the credit limit out and making all payments on time) is a solid baseline for establishing a healthy credit rating.

Ignore the special offers and perks, and focus on the actual terms of service. While gaining airline miles or cash back are nice perks, you need to choose your credit card based on the real benefits or costs-the interest rate and fees charged, the credit limit granted and the reputation of the card.

If you want to take advantage of cash advances, choose a credit card that will send checks to your home or let you get cash advances at an ATM. Remember that the interest rate and fees will most likely be higher for cash advances than the terms on the normal credit card usage, so you’ll need to factor these extra expenses into your credit card choice.

Compare credit limits, cash advance allowances and how the payments will be credited. Many creditors apply payments to the principal balance derived from purchases first, only applying payments to the cash advance balance after the principal has been paid off. This benefits the credit card company, but not you, the consumer.

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Here are five simple tips that you can use to raise credit score.

1. Get a copy of your credit report

Obtaining a copy of your credit report is a good idea because if there is something on your report that is incorrect, you will raise credit score once it is removed. Make sure you contact the bureau immediately to remove any incorrect information.

Your credit report should come from the three major bureaus: Experian, Trans Union and Equifax. It’s important to know that each service will give you a different credit score.

2. Pay Your Bills On Time

Your payment history makes up 35% of your total credit score. Your recent payment history will carry much more weight than what happened five years ago.

Missing just one months payment on anything can knock 50 to 100 points off of your credit score.

Paying your bills on time is a single best way to start rebuilding your credit rating and raise credit score for you.

3. Pay Down Your Debt

Your credit card issuer reports your outstanding balance once a month to the credit bureaus. It doesn’t matter whether you pay off that balance a few days later or whether you carry it from month to month.

Most people don’t realize that credit bureaus don’t distinguish between those who carry a balance on their cards and those who don’t. So by charging less you can raise credit score even if you pay off your credit cards every month.

Lenders also like to see a lot of of room between the amount of debt on your credit cards and your total credit limits. So the more debt you pay off, the wider that gap and the better your credit score.

4. Don’t Close Old Accounts

In the past people were told to close old accounts they weren’t using. But with today’s current scoring methods that could actually hurt your credit score.

Closing old or paid off credit accounts lowers the total credit available to you and makes any balances you have appear larger in credit score calculations. Closing your oldest accounts can actually shorten the length of your credit history and to a lender it makes you less credit worthy.

If you are trying to minimize identity theft and it’s worth the peace of mind for you to close your old or paid off accounts, the good news is it will only lower you score a minimal amount. But just by keeping those old accounts open you can raise credit score for you.

5. Stay Out Of Bankruptcy

Bankruptcy is the single worst thing that will destroy your credit score. Bankruptcy will lower your credit score by 200 points or more and is very difficult to come back from.

Once your credit score falls below 620, any loan you get will be far more expensive. A bankruptcy on your credit record is reported for up to 10 years.

The reality of a bankruptcy is it will limit you to high-interest lenders that will squeeze out high interest rate payments from you for years.

It is better to get credit counseling to help you with your bills and avoid bankruptcy at all costs. By getting credit counseling instead of declaring bankruptcy you can raise credit score over a much shorter period of time.

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