With 80% of American adults having at least one credit card, it is an essential asset for most Americans. Unsurprisingly, credit card holders use Google daily to find answers to credit questions like annual percentage rate (APR), credit scores, and more. According to the financial comparison website Forbes Advisor, the top 10 credit-related inquiries have a total monthly search volume of 276,000.
Owning a credit card can be a bit complex if you’re unfamiliar with its terminologies. And for something regarded as a serious financial decision, it is pertinent to discover all of the answers you require. So, based on this Forbes Advisor study, we built a list of frequently googled credit queries and provided their answers. We also added a few more to the list.
What is APR?
You will find this acronym everywhere on your credit card application. This query ranks as the second most searched, with 59,000 searches per month. The interest rate charged on credit card balances is the annual percentage rate (also abbreviated as APR).
You can avoid paying interest on purchases made with credit cards if you pay off your monthly balance before or on the due date. You only accrue APR costs when you carry a balance on your credit card.
What is a Good Credit Score?
A credit score is a three-digit number calculated using information from your credit reports. Customers are aware of the value of a credit score to the extent that, with 109,000 monthly searches, it is the highest searched credit query.
Generally speaking, and by Fair Isaac Corporation (FICO) standards, credit scores between 580 and 669 are fair, 670 to 739 as good, 740 to 799 as very good, and 800 and up as excellent. If you have a high credit score, lenders and creditors may have more confidence in your ability to repay them if you apply for a loan.
You can also qualify for the best deals. The FICO credit scoring model is the most commonly used, even though there are other scoring systems.
How Can I Build Credit?
Lenders evaluate your credit worthiness using credit scoring models. It is crucial to make on-time payments because your payment history accounts for 35% of your FICO score and 41% of your Vantage score.
By paying off your credit card in full, you can avoid interest charges that begin to accrue during the grace period. On-time payments are also required to keep a clean credit history with the credit bureaus. Another way to build credit is to keep your card active. Closing credit cards that you no longer use can lower your credit score.
Instead, find ways to spend on your credit card by charging a small recurring payment to it. Payment automation helps you avoid missing payments, increasing your credit history length. An increase in credit limit may also help your credit score in the long run.
Also, keep your card usage to 30% or less, and make applications to new credit minimal. A low credit utilization keeps you in good standing with credit bureaus.
What is The Highest Credit Score?
850 is the highest and ideal score, with 300 being the lowest range on the spectrum. But you do not need the perfect credit score to achieve your financial objectives or be eligible for low-interest rates. A credit score of 670 or above is still good enough. Some industry-specific FICO scores are available below 300.
How Many Credit Cards Should I Have?
Your ability to manage credit cards will determine how many you can have. Multiple credit cards can improve your credit score if you can be discreet about their usage. If you use them poorly, the situation is the exact opposite. One advantage of multiple cards is the combination of different rewards from different credit cards to maximize your earnings across all spending categories.
Therefore, you can decide to have more credit cards if you need the extra credit lines to accommodate your monthly budget and want to use your everyday spending to earn different rewards. Before adding a second card, consider waiting a certain amount of time after getting your first card.
When you have several credit cards, you must strike a balance between your overall debt load, the health of your credit score, and your daily spending. If you find it hard to pay your credit card bills on time, it could be a tell-tale sign that you are not ready for another credit card. You can still build a good credit score with just one card if you focus on balancing your spending and debt.
How Do I Get a Credit Card if I Have No Credit History?
People with no or poor credit are not without options. You can look for credit cards with the lowest possible APR and fees. If you have trouble getting cards approved, you could consider getting a secured credit card, which requires a security deposit. Alternatively, ask a parent to add you as an authorized user on their card.
What is a Good APR?
You usually will not get the APR rate credit card issuers claim to offer because your creditworthiness determines how low or high your APR gets. For a start, you get an average rate of 19%. A good APR score typically sits at or below 10%, but you can only get this from a local bank or credit union.
You should consider your APR to be okay if it falls within the average range. A 0% APR is one way to pay off debt and avoid paying interest on large purchases. But 0% of APRs are restricted offers, and only those with decent credit are eligible. Suffice to say that if you can pay your bills in full, APRs would be needless. The best part is you can achieve this without needing credit scores.
How Can I Check My Credit Score?
AnnualCreditReport.com allows you to request a free copy of your credit report from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion) once a year. Furthermore, if you get a credit denial, are on welfare, are unemployed, or have an inaccurate report, you can access your credit report within 60 days.
Credit card companies, banks, and loan companies also provide credit scores to their customers. You can also purchase them from credit bureaus or providers like FICO. In addition, there are free credit-scoring sites you can visit to get your credit score.
What is a Secured Credit Card?
A credit card is secured when you need to deposit money into an account with the credit card company. The credit card company keeps the money as long as the account is active. A secured credit card can help people who are just starting or rebuilding their credit. These cards have low credit limits, and your credit score won’t suffer even if you miss a payment.
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This post was produced and syndicated by Wealth of Geeks.
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Amaka Chukwuma is a freelance content writer with a BA in linguistics. As a result of her insatiable curiosity, she writes in various B2C and B2B niches. Her favorite subject matter, however, is in the financial, health, and technological niches. She has contributed to publications like ButtonwoodTree and FinanceBuzz in the past. In addition to ghostwriting for brands like Welovenocode, Noah and Zoey, and Ohcleo, amongst others. You can connect with her on Linkedin and Twitter.