Should You Apply for That Credit Card?

With the holidays rapidly approaching, your mailbox is probably stuffed with catalogs, credit card, and loan offers, but should you apply for that new credit card, order from that catalog (with the promised credit line), or should you cash that short term loan check?  Granted, money is always tight around the holidays, and affording all of the extra expenses would be a lot easier with a clean line of credit, but what should you look for before you apply?

Make sure you’ll actually qualify for the offers!  One of the most important things to remember when looking at any new credit line, be it a catalog shopping site like a Fingerhut Credit Account issued by WebBank, or a new credit card, or a personal loan, is whether or not you will actually qualify once you actually begin the application process.  Remember, most of those “prequalified” offers are just that – the lender has purchased a list of potential candidates based on your demographic group (your location, age group, income level, etc.), but they have most likely not pulled your individual credit report to see if you would actually qualify once you complete the application process.  So, before you even consider the offer, you should check your own credit report to make sure your credit score would likely qualify you for the offer that you are considering.

Should you fill out the application and mail it back in or should you simply go to the website and complete the application online?  While you might worry about completing an application for credit online, it’s actually safe in most cases to apply online, and instead of waiting for a response in the mail, you’ll most likely find out fairly quickly if you do complete the application online.  Reputable credit card companies, loan providers, and catalog shopping sites have ample safeguards in place to protect your personal information, so it’s usually safe to visit most sites.  (However, this is not the case for most of the offers you receive via email – links in emails are extremely vulnerable to identity theft and you should never click on a link received within an email.  ALWAYS visit that creditor’s site using your browser instead.)

Research all of your options before you apply for any of them.  Just because you received a prequalification offer in your mailbox does not necessarily mean that this the best credit card for you to accept.  Take a look at the fine print… What’s the interest rate?  Are there any additional benefits (rewards, points, introductory rates)?  What is the typical credit score needed to qualify for the offer?  How are charges handled?  What happens if you dispute a charge?  What happens if you fall behind?  What are the over limit fees?  Late fees?

Once you’ve studied all of the fine print, then it’s a good idea to compare the offer with other offers that you are likely to qualify for to see if the card really is a good fit for you.  Then and only then do you actually want to apply for the credit card, place an order with the catalog shopping company, or accept that loan offer.