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5 Reasons to Use Credit Monitoring before a Credit Application

Want a credit card? Here are 5 ways credit monitoring can help.

Credit monitoring can move you forwards towards your goal

A credit card can be a great financial tool – if you can get the right card for your needs.

This is one of the situations where credit monitoring can be really useful. If you can plan ahead before you need you card, you can use a credit monitoring service to maximize your credit score before you apply.

Credit monitoring services let you know your credit scores before you apply, and also gives you important information on what kinds of things are bringing down your score. You can use the information to take steps to improve your credit score as much as possible before you submit the application for the card you want.

Here are five good reasons you should use credit monitoring prior to submitting a credit card application:

Reason No. 1: Make sure your credit is clean and error-free

Consumer credit reports can have errors and mistakes that drag down your credit score, making it harder to qualify for the attractive advertised terms and offers you see advertised. As a result, you could have trouble qualifying for the credit card you want even though these errors aren’t your fault.

A good credit monitoring service tells you what’s wrong in your credit report – it details the negative items that are keeping you from a better score. If you see one of these negative items is an error , you can go through the credit correction process to correct the error before you apply for new credit. This makes it easier to qualify and get a higher credit limit.

Reason No. 2: Get the lowest APR possible

The interest rates on your credit cards matter – in a big way. Just a few percentage points difference on the interest rate for your credit card translates to hundreds or thousands of dollars of added interest charges over the full life of that credit card’s use.

Your number one goal in managing your credit card debt should always be to minimize how much extra you’re paying in added interest charges. This means paying off your debt as quickly as possible, but it also means getting the lowest interest rate possible, too. That way, if it takes longer than a month to pay off a debt in-full, it’s not growing as fast with extra finance charges.

Pop Quiz

If you have a $500 charge on a credit card and make the minimum payments to eliminate the debt, how much total interest will you pay if the APR is 15 percent?

a) $65.55

b) $75.25

c) $150.85

d) $195.50

Reveal Answer

It actually takes three years and eight months to pay off a $500 debt making only minimum payments.

c) $150.85

Return to question

Reason No. 3: Getting the right rewards

These days, it’s all about what you get back from a creditor for using a particular credit card. Rewards credit cards can give you some good incentives when you spend smart, but you need to be able to qualify for the right rewards card.

Fact: As of 2012, two thirds of all credit card users have at least one rewards credit card.

Only consumers with good and excellent credit can usually required to qualify for a rewards credit card. And for the best rewards credit cards (like the ones that offer cash back on any purchases) you’ll need to have the best credit score possible – particularly if you also want to qualify for low interest, too.

Reason No. 4: You can be strategic about when to apply… and for what

Even small changes in your financial outlook can translate into a few points up or down in your credit score. Credit monitoring helps you ensure that some small change in your outlook isn’t going to bump your credit score down right before you apply for your new card.

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For instance, if you’ve applied for a mortgage and an auto loan in the past year, has your credit recovered enough from taking on that new debt? Credit monitoring can tell you.

In some cases, a credit monitoring service may even make recommendations about which credit card would be best for you to get next. You don’t have to always follow the advice, but it never hurts to get recommendations that are based on your personal profile and credit use.

Reason No. 5: You can use it to manage debt strategically

Credit monitoring services provide a wide range of resources and information about each account you have open. You can see your credit limits, the APR on each card, and even get an instant credit utilization ratio on each account that you have open. All of this information can be used to make strategic decisions about how you manage your debt.

You can:

  • Strategically maintain the right credit utilization ratios to maximize your credit score 24/7 and 365.
  • You can evaluate your interest rates to choose which credit card debt to eliminate first to save money on added interest charges.
  • You can use a credit score simulator to see how making changes to your account will impact your credit profile, such as increasing the limit on a certain credit card.
  • You have an early warning system in place for when your debt load starts to get too high and could cause trouble for your finances.
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Article last modified on August 13, 2018. Published by, LLC . Mobile users may also access the AMP Version: 5 Reasons to Use Credit Monitoring before a Credit Application - AMP.