Lenders need to shrink their volume of loans outstanding, and
that definitely includes credit-card loans. They are also looking to replace profits lost to the recent credit-card legislation, which squeezed their ability to raise rates at will. As a result, they're approving few new customers and charging steep rates with low credit limits.
Card issuers strongly prefer scores of 700 and above (on the FICO scale of 300
to 850). The best terms are reserved for people scoring 750 or higher (compared
with 720 a year ago). If your score is lower than 650, you’ll likely
- Low usage of existing cards: Lenders like to see
that you’re using less than 30 percent of your credit limit.
- A long, happy credit history: The longer you’ve
repaid credit on time to the same issuer, the better your chances of approval.
It helps, too, if you have a clean history of paying mortgages and other credit
- Can You Get Credit Now?
- Mortgages: What It Takes to Get One Today
- Refinancing: Is Your Credit Good Enough?
- Car Loans: New Rules for Buyers
- Home Equity: Can You Borrow Against Your Home?
“These days, you should not expect to get a
$20,000 credit line right off the bat. It will be more typical to get $2,000 to $8,000,” says Gerri Detweiler, a credit-card expert at Credit.com.
Say goodbye to those 3.99 percent teaser offers and zero
percent balance transfers.
Here’s a guide to today’s market for
What It Takes to Get Approved
What You’ll Pay
As low as 7.25 percent for scores of 750 and up; 14.99
percent to 21.99 percent for scores of 650 to 699.
If your FICO score is below 580 and you still want plastic,
your only option may be applying for a secured credit card. To get one, you’ll
need to put down a cash collateral deposit; that then becomes the card’s
credit line. Lenders like Wells Fargo and specialty banks such as href="http://www.appliedbank.com">Applied Bank and href="http://www.nmbonline.com">New
Millennium will take a deposit of, say, $300 and charge 9.9 percent
or so with no grace period. Pay on time for a year and you may then be able to
get a real credit card.
If you have only one credit card, secure a backup before
the new rules go into effect in February 2010 — in case your card
company changes its terms on you.
You used to be able to play the tough customer to get your
current card’s annual fee removed, credit limit raised, or interest
rate lowered. Not anymore. Those demands just might trigger a review of your
account. “Card companies are not trying to keep customers, they are
trying to weed people out,” says Detweiler.
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