You might be searching for the answer to “what is a good APR for a credit card” when you realize two things. First, the card you are applying for won’t give you the APR you’re seeking. Second, the reason is that your credit score is too low to qualify.
How do you change that so you can start rebuilding your credit, potentially making you eligible for a lower APR? It helps to know what impacts your credit score and what you can do to start heading in the right direction. Here are a few things to consider.
Lower Your Utilization Ratio
Utilization ratio is a significant credit score factor to consider. It represents how much of your credit limit you’re using. For example, if you have a $1,000 balance on a $2,000 credit limit, you have a 50% utilization ratio. Generally, the lower your ratio, the better. This is why you want to achieve credit card debt payoff if possible. However, you might want to keep a small balance on your credit card. Generally, you want to have no more than about 25% to 30% utilization.
Keep a Low Balance
You want to have a low balance on your credit card so you can keep paying it off regularly. This is known as revolving credit. It shows lenders that you can have some money on the card but can also pay it off responsibly. Essentially, you are building a credit history that shows lenders they can trust you to pay back your credit card debt. Consider what you can reasonably afford to pay each month and whether keeping a low running balance is right for you.
Pay on Time
A single missed payment can be a significant negative factor for your credit score. This is why it’s recommended to make every payment on time. You might need to set due dates in your calendar or use an app that can pay for you. It can be complicated if you have multiple credit cards, a car payment, rent or a mortgage, utility bills, and other payments to make, but making them on time is vital to a good credit score.
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Keep Your Credit Cards Open
The longer you’ve had a credit card open, the better. This is another factor for credit history. Having multiple cards that are a few years old is a good factor. You don’t want to have too many cards open, but the longer you have had them, the more positively they affect your credit score.
Be warned that if you choose to get a personal line of credit to pay off your cards, some companies might close your credit cards. Be sure to find a company that keeps your cards open so they can continue benefiting your credit score while you pay off the line of credit.
Tally aims to help you worry less about finances and get back to focusing on what really matters to you. To do that, Tally can help you break free from your credit card debt. The Tally app was created to help level the financial playing field, which is intentionally complex.
Through Tally’s credit card balance consolidation, you can simplify the entire process with tools like their credit card debt calculator. This helps you get back on the right track and start planning for the future. You can get started with the Tally app in just a few minutes. If you need help with credit card debt or want to see if you qualify for a lower APR, check out Tally.
See how Tally can help you pay off your credit card debt at www.meettally.com
Disclosures: Lines of credit issued by Cross River Bank, Member FDIC, or by Tally Technologies, Inc. (“Tally”), NMLS #1492782 (http://nmlsconsumeraccess.org); see your line of credit agreement. Lines of credit not available in all states.