Four Times You Shouldn’t Apply for a Credit CardSeptember 2, 2010 - 9:33 am
When you want a credit card, it’s easy to think of all kinds of reasons why you should get the credit card. But what about all the reasons you shouldn’t get a credit card. It’s your responsibility to only apply for a credit card when you can actually afford it and use it responsibly. To help you with your decision, here are four times you shouldn’t apply for a credit card.
You haven’t read the credit card disclosure
You should never apply for a credit card if you haven’t read the credit card disclosures. The credit card disclosure includes important information about what the credit card costs – the interest rate, any annual fee, late fees, and transaction fees. Reading the credit card disclosure helps you make sure you’re applying for the right credit card. Law requires credit card issuers to provide you with the credit card disclosure before you apply for the credit card. Ask for it and read through it.
You’re applying for a mortgage soon
Mortgage lenders are supposed to look for anything that would make you a risky borrower. You become a risky borrower if you apply for a credit card within months before getting your mortgage. A mortgage lender sees the credit card as an expense that could make it difficult for you to make your mortgage payments. Put off new credit card applications until after you’ve applied for your mortgage. That way, there’s one less thing standing between you and home ownership.
You can’t afford the credit cards you already have
If you’re already having trouble making your credit card payments, putting yet another credit card in your wallet will only make it more difficult. If you have late payments or high balances on your current credit cards, you may even be denied when you apply for a credit card. While being denied could be a blessing in disguise, your credit score will take a hit if the credit card issuer accesses your credit report to review your credit card application. Wait until you can afford the credit cards you have before you apply for a new one.
You don’t have a reliable source of income
You should never apply for a credit card if you don’t have the money to pay for what you charge. You need to have a steady, reliable source of income before you get a credit card. Otherwise, you’re setting yourself up for credit failure. Your credit score will be affected if you start missing credit card payments and that will make it harder to get a credit card or loan in the future.
It’s better to wait to apply for a credit card until you can afford it and use it the right way. Getting a credit card when you don’t need one can lead to credit trouble and financial disaster. Instead of applying for a credit card you don’t need, focus on correcting the factors that keep you from a credit card. Then you can apply in good conscience.