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Whether you love shopping or loathe it, hunting for a great credit card is one of those shopping expeditions that is well worth it. The deal you snag now on a new card can pay off handsomely in coming years. But before you jump in and start comparing credit card interest rates, fees or rewards, there’s one step you won’t want to overlook: reviewing your credit reports and scores.

This first step is crucial because the information in your credit reports — and the scores that are calculated as a result — will be critical in determining which cards you get and how much you pay for them.

But be forewarned: Card issuers don’t disclose specific details about their credit score requirements up front. And the credit scores they use are most likely “customized,” which means they are not the same scores that you will see when you request them yourself.

Why, then, should you bother to review your credit reports and scores before you get a credit card if you won’t see what lenders see? There are three good reasons:

Spotting Credit Report Mistakes

The first is that if you do find a mistake on your credit reports that may be affecting your credit scores, you’ll want to dispute it and wait for a correction before you apply. Otherwise you could pay more for your next piece of plastic. In a recent study of the credit report dispute process, the FTC  found that 5.2% of participants experienced a change in their score such that their credit risk tier decreased; meaning they may have qualified for a better rate. (In that case they were looking at auto loan rates, but the same principal applies to credit cards.)

Where Do You Stand?

The second is that you want to get your credit scores to see what credit “tier” you fall into. In other words, is your credit excellent, good, fair or poor? The answer to that question will help you avoid applying for credit cards that you aren’t likely to be approved for. Again, most credit card issuers don’t reveal their credit score minimum requirements, but they may state what type of customer they are looking for when it comes to a particular program. For example, a search for credit cards on Credit.com shows that many of the cards offering the lowest rates or most generous reward programs are geared to customers with excellent credit, but there are some available to applicants with good credit. There are also cards geared specifically to consumers with poor credit who are trying to get their credit scores back on track.

Shop With Confidence

The third reason to check your credit scores is so you are prepared to take advantage of great credit offers when they come along. For example, let’s say you see an offer online or in your mailbox promising a big cash-back offer if you qualify. If you already know your credit is in good shape, you’ll be able to take advantage of the offers when you see them rather than worry that you might hurt your credit scores by applying.

Two particular factors you’ll want to look at when checking your credit scores and credit profile are the “age” of your credit history and “inquiries.” In Credit.com’s Credit Report Card, for example, if you score “A”s for both of those factors, then applying for a new card should be no big deal. But if you earned a B- or below, then you’ll want to be more cautious about opening new credit cards and take your time between applications.

Ultimately, shopping for a new credit card is more like shopping for a car than a new pair of jeans. You’ll have to do your homework to snag the best deal. But the payoff will be there every time you pull out that card in future shopping trips. Remember that you can get your credit reports for free once per year from each of the three major credit reporting agencies.  You can also monitor your credit score and review and easy-to-understand breakdown of the information in your credit report  for free using a service like Credit.com’s Credit Report Card.

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  • Jeff Cook

    You didn’t know the limit? You know, it’s not hard to look that up. Weak.

  • http://www.credit.com/ Credit.com Credit Experts

    Susan – the differences in credit scores is one of the most confusing aspects about credit, which is understandable with the number of credit scores available to both consumers and lenders. The following helps explain why you see so many different scores: 3 Reasons Why Your Free Credit Score Looks Wrong

  • Rosaura

    I had a gold master cr card. after using several years, I noticed that there are some charges to my account, $1 every single month. I did not recognized those. I made calls, one after another. The answer was: computer makes charges we don’t have real answer!!!. After 2 years of inactivity, they sent me the silver card to replace w/gold!
    I did not use the card and kept it in the frizzier! Recently I received a letter indicating, because of inactivity, if you do not make a shopping before July 31,2013, we will close your account by the end of Aug. 2013.
    My question is this: is it better for me to close the acct myself before July 31st or wait them to close the account? Which one is my benefit?
    I do not lose my scores, I have excellent score.
    Thank you

    • http://www.credit.com/ Credit.com Credit Experts

      Rosaura – Ideally, instead of closing the card, it would be better to use the card periodically (for small purchases once or twice a month) and pay off the balance at the end of the month. This would keep the credit card issuer from closing the account, and also limit any negative damage to your credit scores. Depending on the available credit limit on the card, closing it could cause a spike in your revolving utilization percentage and lower your scores. For more about why closing a credit card is a bad idea, this article explains everything you’d ever need to know — The Biggest Credit Mistake People Make

      As far as who closes the card, there’s no difference between you closing the account or the issuer closing the account. From a credit standpoint, all that matters whether the account is opened or closed… so there’s no benefit over you closing vs. the credit card company closing.

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  • Colleen

    I dumped capital one a few years back. I initially opened a secured capital one card to establish my credit and waited 6 months to get a “real” card with BofA. When my new card gave me double what my capital one card had and I requested an increase on my capital one card, they denied it (despite promising a review every 6 months) I dumped them as fast as I could so that it didn’t hurt my credit score too much. Even my store cards increase my limits every 6 months (not that I want them to, I have to call to request a decrease on some of them because I don’t want future lenders to view too much available credit as a risk factor.)

    Capital One in my opinion is the worst card to have in your wallet. Low limits, refusal to increase them, high interest and fees. Anyone with any sort of established credit would do themselves a favor and search out other options.

  • rusty artist

    I have several cards, best Discover & ChaseBP Rewards,,,,,,,worst 2 Capital One, 1st card, vary high on interest rate, paid it off, dont use it any more. 2nd Cap.1 card, same thing, but 1yr. no APR. the yr. is up, paying it off soon. Don’t cancel cards, it goes something with your credit rating, just pay off & dont use (so i’v been told).

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  • AB

    We have Capital One and pay off the balance monthly but keep it as a back up to a couple other cards . IF you fly once in a while consider looking into a Southwest credit card ( backed by Chase ) or another Chase card called Sapphire . Southwest normally offers either 1 free round trip if you qualify ( 25,000 points ) or 2 free round trip tickets depending on the time of year they offer this promo . They also offer a business card so IF you can catch the 50,000 promo on both the personal and the business card like we did
    other than paying the $ 69 . or $99. annual fee you might need to spend something like $ 2000.00 on each card in the first 3 months to qualify .

    When we did the Sapphire card they gave us 40,000 bonus points for qualifying which ment we needed to spend $ 3,000.00 in the first 3 months . Annual fee on this card was waived for the first year .

    Final word on the cards is you can cancel at any time but most cards will offer to pay bonus miles to your account on the cards anniversary date .

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    Why is it considered not good to pay off an account and close it. I f the card is not used for a few months, the company has the right to close it. I also love Capital One and have several credit cards with them and they wont lower the APR nor give me an increase. I pay my bills before the due date and pay triple the amount due. I asked Capital One to combine my accounts together so I will only have one card and they said no.

    • MichaelT

      Closing an account may actually lower your credit score. Part of the score is length in time of credit, and closing the account will negatively affect that. Pay off the card, but keep it open. That will help with your utilization percent (amount of credit used/amount available.)

    • Gerri Detweiler

      Annie – This article should help explain why closing an account can hurt your credit scores: 9 Mistakes That Kill Your Credit

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  • Allen

    I had account with western Finance which I paid off on time each time I paid off the account its posted as closed which brings down my credit score. so I spoke with the
    corporate office I was told thats just the wat it is and there is nothing or anyone can
    do about it Need any help that can be offered.

    • Gerri Detweiler

      Allen – There are some things you can control with regard to your credit reports and some you can’t. The fact that the lender closed the account when you paid it off is one of those things beyond your control. It sounds like it’s accurate so it’s not something that can be disputed. What I would suggest you do next is get your free Credit Report Card from Credit.com which will break down your score into the main scoring factors. Take a look at the factors where you aren’t getting a high score, and see what you can do about those. There may not be a quick fix but over time you should be able to make progress.

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  • Charles

    good read. now lets reform these credit bureaus.

    • RIC


  • Susie Hall

    I recently canceled my Capital One accounts. I experienced the exact same thing with denials of credit limit increases or lowering interest after many years of good payment history. In the meantime I had Discover, American Express, and other cards with 0% interest and felt why bother with Capital One any longer because this was the same thing many people I read about experienced. Find a new card company.

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  • Nike Otim

    I just read your blog on “The First Thing to Do Before Applying For a Credit Card” which was very timely for me as I was waiting to have “little or no debt” before applying for a credit card. (at this time I have a $3990 limit of a $10k loan which I opened 10 months ago) I have been with Capital One for 15 years and have 3 cards with them with limits of $900, $1300 & $2300. I have, what I consider “excellent credit” with them and paid my balance in full monthly. Last June I called and asked for a credit increase & my APR reduced because in the 15 years with them, I have NEVER received a credit increase, NEVER, which after talking with several people and my financial advisor, find that incredible. To my shock and amazement, I was denied! I paid a $63,000, 30 year mortgage off in 8 years (February 2011). Can you help me understand why I would be denied?

    I have pulled my credit report from all three credit bureaus and everything is reporting correctly. My TU report shows 840, Experian 824 & Equifax 835. My Equifax report shows 724, Experian 722 & TU 722. My Experian reports shows 708, Equifax 712 & TU 703. How can these reports be over 100 points in difference and which one do I trust? I can’t seem to get any answers from any of these agencies as to why such a huge discrepency in scores. Perhaps you can help me find the answers.

    I wanted to stay with Capital One just because of the long term “relationship” I have with them, but it seems that doesn’t matter. I know people who have bad credit and was initially given a Capital One card with a $2000 limit and just recently there limit was increased to $4000. How does that work? I would have thought by paying off my mortgage and paying my bills on time, I would be “rewarded” with a limit increase. Please help.

    • Helen N.

      Nike Otim, I have exactly your situation. I have been with Capital One around 3 years and this is my first and only credit card. I have paid them in full every month (which I know they don’t like). I don’t have mortgage but I paid off my house (I know it doesn’t count). I pay my bills on time, even a half of month ahead. I called them two times to increase my credit limit and switch my account into some other to earn rewards but they refused. The thing is they only want you to open a new credit card, that’s all. I plan to pay off my furniture within 1 year (it will be ended at the end of this year) and apply another credit card of some bank which I prefer is BoA because they offer very interesting rewards. Capital One is only good for some one who just start with their first credit card. They approve easily but never increase your credit limit later. You shouldn’t cancel your first credit card because it hurts your credit score. Keep it, use only few dollars per month to make it active. Then you use the new one to earn more benefit, even more money, because you know you have ability to pay it off. I am working in financial field and I have seen many customers, especially my mother-in-law, she had never had any credit score before and she got approval with $5,000.00 credit limit while BoA only approved $500.00 few days ago. I believe if I get my new credit any where else, I will have at least $5,000.00 credit limit. Therefore, forget Capital One but still swipe only one time per month, earn money with your new credit card, happy with big transaction online without worry about credit limit. The more you swipe your credit cards, the more money the bank earn from merchants. Why are they so mean to increase your credit limit to let them earn more or give back little their earning to their loyal customers by rewards? I called Capital One at the last time and told them I would switch to another bank. Actually, my credit score isn’t as good as yours because I just build it 3 years. However, I only need one more car to buy. Therefore, whenever I buy my other car beside my paid-off car, I get rid of Capital One no matter what my credit score will drop down.
      Hope this help you. About credit scores, it is another long story. You can search to find from other articles.

    • Gerri Detweiler

      Nike –

      Who knows? There could be some kind of internal policy because you already have three accounts with them. But it sounds like your credit score is strong, those limits are small, and it’s their loss if you decide to take your business elsewhere.

      If you do decide to switch, I wouldn’t recommend you close your accounts until you have established a new card, and then only close one at a time – you don’t want to create new problems for your score. (Don’t close any that are not charging an annual fee. Keep those open and maybe use them every once in a while and pay in full.)

      There are some excellent reward credit cards out there, so feel free to find one that works for you.

      As for the differences in your credit scores, that one is straightforward: the services you are using to review your scores likely use different credit scoring models. I explain that in this article: 3 Reasons Why Your Free Credit Score Looks Wrong

    • Toughy

      The key thing with these credit card companies is simple. Let them eat and they will let you eat more. I started with AMEX and charged/paid over 50K in less than a year and didn’t get any perks or rewards. Why? Because I didn’t let them “eat” meaning get any interest off of me, always having a credit balance when my statements came in. Credit card companies hate folks like us. Now being that I started letting them “eat” getting some interest off me I have all the perks and then some, not only with my AMEX but with my Chase Slate, Citi Preferred and Discover. All you have to do is let them get a little interest for about 6 months and watch your credit increase since they will assume that you probably fell on hard times and can’t pay the balance in full any more, so they will assume if they give you more you will spend more for them to make off of you but you’re just reeling them in to get more credit. You must have the discipline to stay the course and not let your spending habits get out of control. I accomplished this in about 2 years after defaulting on at least 6 credit cards and a car loan while I was in my teens and 20’s. Credit Scores currently 715, 715, 711 and on the rise with 4 CC’s and 1 MBFS auto loan under my belt working my way towards a mortgage.

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