Imagine you just perused all of NerdWallet to find the very best credit card for you. You might wonder: Is it important to check my credit before I apply for that new credit card? Does it really matter? If the issuer is going to do it anyway, why is it important for me to check my credit before applying for that new credit card?
It’s not essential to check your credit before you apply for a new credit card, but it’s a good idea. Here’s why:
Your credit report may contain errors
You may find an error in your credit report. It doesn’t happen often, but it can happen. You don’t want to have your application turned down for the wrong reason, because other creditors can see if you’ve recently been turned down for credit.
If they see this, they will be less likely to extend credit to you, and now you’re in a vicious spiral.
If you find an error, you should absolutely dispute it. This is a vital step in ensuring you have a clean report. You can read about the dispute process here. In short, when you dispute an item, the credit bureaus have to contact the furnishing party to check on the item’s accuracy. You get to submit all the supporting documentation you want.
The matter should be resolved within 45 days.
You should know your score
You also want to check your credit score with Fair Isaac. That’s the FICO score you hear so much about.
Don’t get the scores offered by the three credit bureaus. These are scoring models that most creditors don’t care about.
While you can get your credit report for free once a year at www.annualcreditreport.com, free FICO scores are hard to come by. There are usually strings attached, such as having to subscribe to monthly credit monitoring.
So pony up the reasonable fee for your FICO score. With this, you are looking for the range of score you fall into. The higher your score, the better your chances of getting the card you want.
Top tier — creditors will love you
The best tier of score is anything at 800 or above. Creditors will love you. The score indicates you are a very low risk to them, and you are likely to get the very best terms for whatever card you apply for.
Almost-top tier — you’re still in great shape
The next tier is 760-799. This is still an excellent score, and you are still likely to get the best terms for your card, or at least something that is significantly close to the best terms that any difference in not likely to be material.
Third tier — you’re desirable, within limits
From 700-759, you should still be in very good shape. You are likely to get approved for the card, but you may not get as high a limit as if you had been in a higher tier. You are likely to get a 0% introductory rate if that’s why you are applying, but you may not get it for the full promotional period. Your regular APR is also likely to be a bit higher than the lowest one advertised.
And then …
Things get a little dicey below 700. You are approaching the zones known as “near prime” or “subprime” for creditors. Anything can happen here.
This is why you should look at your credit score. You may be in a lower tier than you expected and should work on improving your credit score. You may also be very close to a new tier and can take steps to boost the score a few more points for more favorable terms.
Thoughtful man image via Shutterstock.