First of all, no credit card is going to offer 0% financing forever. Let’s just make sure that is understood that at some point after you activate your 0% APR credit card, usually 6 months, your APR will increase to whatever your credit rating dictates. If you were approved for a 0% credit card offer, then your rating is probably pretty good and your APR should be competitive.

There may be fees associated with your credit card during and after the introductory period, and we will take a look at them here:

Annual Fee – If your card has an annual fee, then there is no way you are going to get around it. The fee will be applied to your card either the second billing cycle after you receive the card, or the first billing cycle after your intro period. Annual fees are not as common as they used to be, and range anywhere between $15.00 to over $100.00 depending on the card. The terms and conditions will clearly define any annual fee that may apply.

Minimum Finance Charge – This is fairly self explanatory. Regardless of how much balance you leave on your credit card at the end of any billing cycle, there will be a minimum finance charge. This charge differs from card to card, but is usually around $1.00. If you have an APR of 11%, and you leave a balance of fifty cents on your card, you will be charged the minimum finance charge, in this case $1.00.

Transaction Fees For Balance Transfers – Obviously this only applies if you have made a balance transfer, but many consumers apply for 0% credit cards for the specific purpose of transferring a balance to a new card to avoid finance charges for a limited time. There will almost always be a fee applied the moment the balance transfer goes through, as well as a minimum fee. An average transaction fee is around 3% of the total amount transferred, and a common minimum fee of $10.00.

Late Payment Fee – Another self explanatory fee, this is applied anytime you make a late payment. As it relates to 0% Credit Card intro offers, if you make a late payment to your creditor, then you owe the late payment fee and your APR immediately increases to either its normal rate, or its default rate which will be much higher. The fee itself is usually determined by the amount of your current balance. An example would be “$15.00 if the balance is up to but not including $250.00; $39.00 if the balance is $250.00 and over.” This of course can differ between issuers.

Over-the-Credit-Limit Fee – This fee has become very rare in today’s market, but it’s still there. If you somehow manage to charge more than the limit of your card, which is difficult to do now that all purchases are checked electronically, then you will be assed a fee for doing so. This fee ranges around the $35.00 area, but can be much more.

International Transactions – Anytime currency is exchanged through the use of a credit card a conversion fee is levied. This means if you are on vacation in Italy and make a purchase using your American credit card, there will be an additional fee added to the transaction. This fee is usually around 3% of the dollar amount of the purchase. Don’t let the word International fool you though. You can get hit with this fee through internet purchases as well if the seller takes payment in anything other than US dollars.

None of these fees are so exorbitant that they look malicious, but they should be avoided if at all possible. Every fee you incur lessens the value of your 0% credit card and could possibly increase your APR to something you would not want.

A Credit Bureau, also known as a Credit Reporting Agency or Consumer Reporting Agency, functions as a central repository of credit and collection records, payment history and certain legal information on consumers and businesses. These records are sold to credit grantors and lenders whenever a consumer or business applies for credit. The three major U.S. credit bureaus are Equifax, Experian and TransUnion. A fourth credit bureau, Dun and Bradstreet Corp., specializes in reporting business credit information exclusively.

Local credit bureaus first appeared in the United States around 1860 and were primarily designed to provide local merchants with a way to keep tabs on local citizens who traded in the merchant’s immediate community. Credit bureaus began to spread across the country after the end of World War I when returning soldiers began looking for money to buy homes, automobiles and consumer goods.

As credit purchases began to replace cash as the primary currency for the purchase of big-ticket items, and the nation became more mobile, the need for national credit bureaus became apparent.

Today’s credit bureaus store over 1 billion consumer and business records, and almost 2 billion individual credit transactions are entered into those records every month. With all of this activity there is always a chance that a credit record may contain errors. That’s why the U.S. Government passed the Fair Credit Reporting Act (FCRA) and the Fair and Accurate Credit Transactions Act of 2003 (FACTA). Both of these acts set out requirements for credit bureaus to maintain fair and accurate records, provide a way for consumers to view those records, and respond to consumer complaints of inaccuracies should they exist.

The introduction of the Internet, and the World Wide Web in particular, gave lenders a new and profitable way to make credit-based lending decisions on-line and “instantly”. This made it possible for charge card issuers and lenders to offer credit to consumers who were willing to fill out credit applications online. Key information from the application, including the applicant’s full name, address, Social Security Number and date of birth is transmitted over the Internet to the lender’s particular credit bureau. The credit bureau’s computers look up the consumer's record and calculate a credit score based upon certain financial criteria. If the score is above the lender’s minimum threshold, the application is instantly approved and both the lender and the borrower are notified.

Writing a bad check can really be a tough predicament. It can happen to anyone, even those who that make an effort of taking care of their money. Poor budgeting and impulsive thinking are the most common root of this financial problem. If you happen to blunder into this situation, acting quickly to resolve this problem is critical because this mistake can be costly.

While a single bad check may not be too much of a problem, a number of them can cause havoc on your budget. You have to pay a bank fee which can range from twenty to thirty dollars or more. You may also have to pay the same price to the person or store for the inconvenience you have caused.

If your bad checks pile up, your bank account will quickly go into negative numbers and your bank may ultimately decide that you are a huge risk and close your account completely. Opening a new account will not be possible unless you repay the balance of your previous account and your bouncing check will recorded on ChexSystems alerting other banks of your infractions

Your problems can also worsen if establishments resort to legal action to retrieve their money. You may receive a call from companies that specialize in recovering bad checks, reminding you to resolve the problems with their clients as soon as possible. Bad checks will not affect only your finical situation; your reputation can also be destroyed as well. Banks will be reluctant to do any business with you and it will also diminish of job opportunities that will be available to you.

Try to avoid writing bad checks as much as you can. The problems that plague you after writing one can plague you for a long time. If an accident does happen, try to work out the problem as quickly as you can. Your future and reputation are at stake so always keep an eye out to keep your financial situation healthy.

You won't be able to calculate the effects that a low credit score can cause but you will be able to recognize the damage that it can do your life and to your finances. The good thing about your credit score is that even a small increase in your score can save you thousands of dollars of interest in your home mortgage, car loan, or the rates on your credit cards.

Your credit score is a dynamic number and it will change every time your credit report changes. Even though you may think that this change is insignificant it can have a big impact on your credit rating. If you want to improve your credit score here are some things that you should focus on as per the financial experts:

1. Carefully review your credit report and then take the time to correct any errors. This includes getting rid of information that is bad and inaccurate. This step alone can make a big impact on your credit score.
   
2. Don’t take old financial advice that tells you to close any credit card accounts you have that are unused or old. Doing this will reduce the amount of potential available credit that you have but will also change your debt ratio by raising it. You don’t want to raise your debt ratio since this will lower your credit score.
3. Creditors will look at the average amount of time that you’ve had your accounts so this is another reason to keep your old accounts around.
4. Start paying off your credit cards. Try to reduce the balance on your cards by at least 75% or lower of your total amount of credit. If you can’t do 75% work towards at least 25%.
5. Pay your bills when they are due! This is perhaps the most important thing that you can do to raise your credit score.
6. Try to limit the number of inquires that are made on your credit report. This means applying for as few new credit cards as possible. The less inquiries, the higher your credit score.
7. Don’t apply for new credit cards just so that you can increase the amount of credit that you have available to you.

People seldom know why they have been turned down for credit. In fact, it often comes as a shock. Some people don't find out till they are standing in a shop with a store card application in their hands. But did you know that your lifestyle could seriously affect your credit rating? Here are three ways in which you could damage your credit rating.

1. Change Your Bank

Lenders like to see that borrowers have been with the same bank for a while. It shows continuity and responsibility, both of which are good for credit reports. Borrowers who have had a long history with the bank and have had different banking products are popular with lenders. So if you've had a credit card, cheque account, loan or authorised overdraft and have paid them all perfectly, this is a good sign for lenders.

Of course, there's always a tempting new offer from a different bank. Maybe you fancy a larger overdraft, a financial incentive or just a change. Even if you get a new bank account, it's worth keeping the old one to show some banking history.

2. Avoid Responsibility

Lenders assess responsibility in several ways. First of all, it is important to be on the electoral roll. This makes it easy for lenders to track your address. If you have been at the same address for more than three years, this is also good.

Even better for borrowers is owning their own home. This is one of the best indicators of financial responsibility as far as lenders are concerned. People who have been approved for a mortgage must be responsible. People who rent their homes or who live with parents score less well for credit reports.

It also helps a bit if you are relatively mature. This is one time when getting older is a benefit. You should also have a telephone at home. This proves that you have been approved for credit and have paid your bills on time (provided it's working, of course).

3. Mismanage Your Credit

One of the best ways to be approved for credit is to show that you have had credit and managed it well. It pays to apply for a credit card, store card or loan and to make the necessary repayments on time and in full.

If, on the other hand, you make late payments, miss payments or don't pay at all, your credit report will look rather different. Arrears, defaults and County Court Judgements (CCJs) do not look good when you're applying for credit. They tell lenders that you have mismanaged credit in the past. This makes you a poor risk.

Of course, even people with poor credit reports can get credit. Payday loans and homeowner loans cater for these people. But the interest rates that are offered to people with a poor credit history are much less attractive than those offered to people with five star rating. However, if people manage this type of credit well, they may be able to improve their credit rating.

Having a debt and paying no interest on it seems almost too good to be true. But many consumers use their credit cards to do just that. The process is known as rate surfing or credit card jumping.

How Do I Start With Credit Card Jumping?

Many credit card companies offer preferential rates to new customers. These can take a variety of forms. Some credit cards offer long term low interest rates. Others offer a 0% rate on purchases for a fixed period, usually six months. Still others offer a 0% interest rate on balances transferred to the credit card. This last type of offer is the one that is of most interest to credit card jumpers.

All people need to do is apply for the credit card as usual. Most credit card forms, whether online or in print, have a section where applicants can write the card numbers of the cards they hold and the amounts they want to transfer. Balances can be transferred from other credit card and from store cards.

Some credit card companies also allow new applicants to transfer loan amounts by using credit card cheques. It is worth checking that such cheques also enjoy the 0% balance transfer rate. Credit card cheques are often treated as cash withdrawals and can attract a higher interest rate.

How Does Credit Card Jumping Work?

The key to successful credit card jumping is to move the outstanding balance to another credit card with a 0% rate just before the interest free period expires. This means:

- Finding a new credit card with a 0%i balance transfer rate (maybe by looking on the internet)

- Applying for the new card at least a month before you want to transfer the balance

- Transferring the money from the old card at least a week before the interest is due to be applied.

This is not a difficult strategy for anyone who is well organised. To avoid hurting their credit rating, which could lead to refusal for other cards, it is essential for card users to make at least the minimum payment each month. The payment should also be made on time.

Do Credit Card Companies Make Money From Jumpers?

They don't - or at least they didn't. Credit card jumping has cost credit card companies hundreds of thousands of pounds each year. That's why credit card companies have come up with a new way to make money from credit card jumpers. It's called the balance transfer fee. The balance transfer fee is a fee of around 2% that is applied to balance transfers. This means that credit card companies get their money up front.

This is not good news for credit card jumpers, though credit card jumping may still be worthwhile if the current interest being paid on the debt is high. Although many credit card companies apply a balance transfer fee, not all do, so it is worth shopping around. There could still be time to do some credit card jumping.

With gas prices still very high, people want to save some money at the pump. Gas rebate credit cards are becoming a very popular alternative. The average gas rebate credit card can save you up to five percent on gas purchases. If you’re not careful with your credit card use, a gas station credit card could make you pay more for your gas.

Misleading Gas Credit Card Applications

Before applying for any credit card, read the terms and conditions. Most gas credit cards claim high cash back percentages, but there is usually a catch. Here are some examples:

• cash rebates limited to one gas station company
• high cash rebates only during an introductory period of usually 6 to 12 months
• a monthly or annual limit on how much cash back you can earn
• a tier structure with varying cash back percentages depending on spending

The credit card companies are very careful with their marketing wording. A cash back percentage is usually quoted as ‘up to 5% cash back’. Once they say ‘up to’, you know you won’t get that high cash back all the time. So know what you are applying for to prevent disappointment.

Keeping a Balance Will Blow Your Cash Rebates

With any credit card, if you only make the minimum payment and keep a balance, you will pay interest charges. Over time these interest charges could cost a lot more than any cash rebates you earn. Try to only use your credit card as much as you can afford to pay off next month. This can be difficult to adjust to for some people. Suddenly they are paying for everything with their credit card to earn more cash back. Meanwhile it seems as if their bank account is unaffected. This could lead to impulsive spending. Before they know it, their bank account is empty and a big credit card bill shows up. Then the interest charges add up. This is how credit card companies can afford to offer cash back. Ideally you should keep track of your credit card spending and keep that much cash aside as money already spent.

Gas Rebate Credit Cards Offering Rewards Other Than Cash Back

If you are trying to save money with a gas credit card, choose your credit card rewards carefully. You could earn airline rewards on your gasoline purchases, but they cost more money in the end. Airline rewards would likely only cover a portion of you or your family’s airline tickets. Then factor in vacation expenses and lost wages. Other gas station reward credit cards offer gift certificates. Again it usually only covers part of the purchase and it is something you wouldn’t normally buy. To really save with gas credit cards, apply for a gas credit card that offers cash rebates as checks or statement credit.

Why Are Gas Rebate Credit Cards Still So Popular?

Gas prices are a major economic factor. We hear about gas price fluctuation in the news. The credit card companies are aware of this concern. Nearly every gas station company has its own credit card and many of them are heavily marketed. Despite some reward limitations, many of these gas rebate credit cards are very good deals.

If you spend a lot of money on gasoline, a gas rebate credit card can get you the cheapest gas prices. A gas rebate credit card used responsibly could save hundreds on dollars off your gas bill each year. Ensure you are familiar with your credit card rewards program details though. Pay off your credit card each month and avoid interest charges. Compare credit card offers carefully and read the fine print.

Cash back offers are a type of rewards program where the cardholder receives a cash rebate equal to a specified percentage of the amount charged to the card on an annual basis.

Cash back reward programs started appearing in 1990 when the Discover Card made their industry-shattering 1% cash back offer. Other cards soon followed.

Cash back programs typically come with higher interest rates than cards that do not offer a cash back incentive. If the cardholder does not pay their balance in full every month, that higher interest rate can offset the value of the cash back incentive.

A recent survey by BankRate.com revealed that four out of five cardholders preferred to receive lower interest rates rather than cash back. Nonetheless, cash back rewards can make sense for people and organizations that make large purchases regularly and pay the balance in full.

The original Discover Card cash back offer was pegged at 1% of annual purchases. This means that a cardholder who charged $10,000 over a 12-month period could expect to receive a check for $100.00.

As cash back reward programs spread throughout the charge card industry, and consumers began to take advantage of them in large numbers, charge card issuers began to adjust the payment percentages to offset the sums they were obligated to pay out each year.

Most card issuers established a tiered level of rebates that were tied to amounts charged to the card. Scenarios such as 1/10th of 1% for monthly purchase below some high dollar amount, such as $2,500, became common. Today there are a number of different payment programs in effect and it can be a full-time job just selecting the card with the best offer.

In recent years some charge card issuers have been partnering with large corporations to establish attractive cash back offers tied to purchases of specific products or services. Citibank, for example, launched their Dividend Rewards MasterCard which offers a 5% rebate on gasoline and grocery store purchases, along with drug store purchases, and 1% on all other types of purchases. General Motors issued a MasterCard which offered cash credits that could be used to purchase GM vehicles.

A credit card-based cash advance is a method allowing the card holder to convert a portion of their available credit limit to cash. The method of obtaining the cash can range from using the credit card in an authorized ATM, writing special cash advance checks against the card’s open to buy credit limit, or presenting the card in person at an authorized bank or lending institution. A cash advance is, in effect, a loan.

Unless the card issuer is making a special cash advance offer, receiving a cash advance, even if it is paid back quickly, is one of the most expensive methods of borrowing money. That’s because of several reasons which include:

• Cash Advance Fee

  This is a fee that the card issuer levies whenever a cash advance is accepted. Although some special offers may establish a flat-rate fee, it is usually a percentage of the amount borrowed. Depending upon the state where the card is issued, that percentage rate can be quite high. The average fee runs between 3% and 9%.
  
  

• No Grace Period

  Except for some secured charge cards, issued to buyers with poor credit, charge card companies allow a grace period of 20-30 days, on average, for the cardholder to pay new charges off in full without incurring interest. This feature is usually not available when a cash advance is taken, so interest starts accruing at the moment the cash is received and continues to compound until the loan is paid in full.
  
  

• Higher Interest Rates

  Card issuers almost always charge a higher interest rate for a cash advance then they do for normal purchases. This may not be apparent unless the terms and conditions of the cash advance are examined carefully. Some charge card issuers may charge the maximum interest rate allowed by the laws of the state where they issued the credit card from. In the case of South Dakota, home to Citibank credit cards and several others, that interest rate can be as high as 20%.

• Payments Applied To Purchases First

  The credit card issuer will apply the monthly payment to normal charge card purchases first. If there is anything left after that payment is applied then it will be posted against the cash advance. This means that if a cardholder only makes the minimum monthly payment, it could end up taking years to pay back the cash advance.

Beware, Traps Ahead

In Part I of this article on making free money from balance transfer offers, we looked at balance transfer offers and how some very smart credit card holders are making money from balance transfer arbitrage. Today we're going to take a look at some of the things that you have to watch out for in using this strategy. As I stated in Part I, this credit card strategy is not for everyone. If you slip up just one little bit in executing it, it could wind up costing you money instead of making you money. Here are some of the things you need to watch out for:

Whether or not the the convenience checks are treated as a cash advance or a balance transfer. Be very careful on this because, the credit card issuer may classify a check made payable to the card holder as a cash advance instead of a balance transfer. If the offer treats balance transfer checks made payable to you to be cash advances, toss it in the garbage. The high APR for cash advances will be too much of a hurdle to overcome for the arbitrage strategy to work the way we want it to.

Know which APR applies. Yes, the offer states 0% APR balance transfer, but that doesn't mean that its the same one for purchases (or for cash advances). You may find some 0% APR on purchases offers, which is great, but in most cases, there's a higher APR for purchases. Like I said before, outside of the default APR, the cash advance APR will be the highest. Be sure to use another credit card, like a cash rewards card, for your purchases. That way you get some cash back. Don't use your balance transfer card or any other credit card for cash advances.

Transaction fees for balance transfers and caps. These fees are spelled out in the terms & conditions of the offer and expressed as a certain percentage of the balance, as well as a minimum and a maximum dollar amount. The lower the fee, the better for you and no transfer fee is the best. Keep in mind that these fees reduce the amount of money you can make from this arbitrage play. For example, State Farm Bank will pay you 5.5% for depositing $30,000 with them in a high yield savings account, but the credit card company is charging you 3% in transaction fees on that $30,000 balance, leaving you with a net of 2.5%. The fees knocks out the excellent interest you're earning at the bank. Avoid offers that have no caps on the transaction fees.

Length of time for teaser rate. The promotional rate is usually good only for a limited period of time. For the purposes of maximizing the interest that can be earned, look for deals where the teaser rate is good for 12 to 15 months. Avoid the short term offers.

Oh, There's More

Beware of purchase requirements to maintain the low interest rate. Remember, in most instances the APR for purchases is different from, and usually higher than the APR for balance transfers. The balance transfer gets the teaser rate and any purchases get the higher interest rate. Any payments on that card are applied to the lowest interest balance first, then the meter starts running on the interest for any purchases made. That's why you should only use the balance transfer credit card for borrowing only. Also, be sure to make all payments on all debt on time! Most credit card companies, under the Universal Default Clause, can jack up the APR if they discover that you've paid any creditor late. Set up monthly payment reminders if you are prone to forget. Even better, set up automatic bill pays to make your payments. Speaking of payments, if you are depositing the borrowed funds into a high yield savings account, link it to a free checking account with the bank for the purpose of making the minimum payments. Most banks put a limit on the number of ACH withdrawals from high yield savings accounts and some major credit card issuers will flat out reject any payments from these accounts.

If you travel frequently, you can surely benefit from travel reward credit cards. However if you only travel once in a while, you may find that the benefit of these credit cards is offset by high APR annual fees and hidden charges.

Some travel reward credit cards are specific to airline travel, or even to one specific airline. They might also provide rewards if you purchase gas, stay at hotels, rent cars, or if you buy from retail shops. You should asses what type of use you might make of travel reward credit cards, before you choose from credit cards offers. You should also find cards that offer the highest savings on the types of use you will often make of them.

Even if you are not the traveler, the discount that these credit cards offer may still be useful. For instance, if you are a recruiter who is flying job applicants in for interviews, you might find the airline or car rental perks advantageous.

Travel reward credit cards can offer cash advances that can be very handy when you travel. However you should remember to inquire about the charge for cash advances. They can also provide travel insurance that includes medical evacuation, emergency expatriation, lost luggage, and other worldwide emergencies. These can be difficult to resolve without adequate pre-travel preparation and purchase of coverage.

These cards may also offer points or discounts if you purchase from retail stores, although most cards do not unless you are carrying over a balance at the end of the month. Remember to check and see if the travel reward credit cards you are considering have a maximum limit on the monetary value on which they will offer rewards.

It is also helpful if you are familiar with the schedule and the value of the travel rewards that these credit cards may offer. You need to know if the credit card company will send the money or do you have to wait until the end of the year to get your cash from these credit cards. The majority of travel reward credit cards will offer Canada and U.S. round tip flights at the reward redemption value of a single round trip ticket for every 25,000 miles you purchase on your credit cards.

Have you heard about travel reward credit cards? These cards can be very beneficial to people who travel regularly. However, those who rarely travel might find that any benefit offered by these credit cards is offset by a high APR, annual fees and other types of charges. However, even if you are not the traveler, the discount that these credit cards offer may still be useful. For instance, if you are a recruiter who is flying job applicants in for interviews, the airline or car rental perks will be advantageous for you.

There are travel reward credit cards that are specific to airline travel, or even to one specific airline. They might also provide rewards if you stay at hotels, rent cars, purchase gas, or if you pay for merchandise from retail shops. It would be wise if you can asses what type of use you might make of travel reward credit cards, before you choose from credit cards offers. Try to take advantage of offers with highest savings on the types of use you will often make of them.

Some travel reward credit cards offer cash advances that can be very handy when you travel. However you should remember to inquire about the charge for cash advances. They can also provide travel insurance that includes lost luggage, emergency expatriation, medical evacuation, and other worldwide emergencies. These can be difficult to resolve without adequate pre-travel preparation and purchase of coverage.

These cards may also offer points or discounts if you buy from retail stores if you are carrying over a balance at the end of the month. Try to check and see if the travel rewards credit cards you are considering have a maximum limit on the monetary value on which they will offer rewards.

It would be smart to be familiar with the schedule and the value of the travel rewards that these credit cards may offer. You need to know if the credit card company will send the money or do you have to wait until the end of the year to get your cash from these credit cards. Most of travel reward credit cards will offer Canada and U.S. round tip flights at the reward redemption value of a single round trip ticket for every 25,000 miles you purchase on your credit cards.

People who travel frequently can benefit from discounts that travel rewards credit cards offer. But those who don’t travel often can find that any benefit may be offset by the high APR annual fee and other charges that come with these credit cards. These credit cards can also come in handy even if you are not the one traveling. If you have relatives who visit you regularly every year, they can also take advantage of airline and car rental perks that are offered by travel rewards credit cards.

Travel reward credit cards can be specific to airline travel, or even to one specific airline. They might also provide rewards if you pay for fuel, rent cars, stay at hotels, or if you buy from retail shops. You should consider what type of use you might make of travel reward credit cards, before you choose from credit cards offers. You should also find cards that offer the highest savings on the types of use you will often make of them.

Some travel reward credit cards offer cash advances that can be very helpful when you travel, but you should remember to inquire about the charge for cash advances. They can also provide travel insurance that includes medical evacuation, emergency expatriation, lost luggage, and other worldwide emergencies. These can be difficult to resolve if you neglected to consider adequate pre-travel preparation and purchase of coverage.

These cards may also offer points or discounts if you purchase from retail stores, although most cards do not unless you are carrying over a balance at the end of the month. Check and see if the travel rewards credit cards you are considering have a maximum limit on the monetary value on which they will offer rewards.

Try to get information about the schedule and the value of the travel rewards that these credit cards may offer. You need to know if the credit card company will send the money or do you have to wait until the end of the year to get your cash from these credit cards. A few travel reward credit cards offer Canada and U.S. round tip flights at the reward redemption value of a single round trip ticket for every 25,000 miles you purchase on your credit cards. If you want to enjoy the best benefits from these credit cards, you should compare as many offers as possible to find the most advantageous deals.

False:

An impressive salary doesn’t translate into a good credit report or good credit score. It’s true that a lender will look at the amount of money you make to determine your ability to make your monthly payments on the loan but, that’s as far as it goes.

Your credit worthiness is based upon your credit history, not your salary. Creditors use a FICO score to determine if you are qualified to get a loan, and at what interest rate that loan needs to be paid back at if you are approved.

FICO scores range from 400 to 850 points. The higher your score, the lower your interest rate will be and the easier it will be for you to obtain credit. Here is how your FICO score is calculated:

35% - Payment History – This is the bulk of your score but not the end all, cure all. If you just make timely payments, that doesn’t mean you will have a good score but it most definitely dramatically effect’s your score if you don’t.

30% - Amounts Currently Owed – The FICO system takes into consideration the amount of existing lines of revolving credit you currently have.

It calculates the percentage of available credit on those existing lines. For an example: You have 3 credit cards with $2,500 limits on each of them. That gives you $7,500 worth of existing credit. You currently carry $2,000 balances on each one ($6,000 total). Take the $6,000 and divide it by $7,500. You will end up with an 80% utilization rate and a lower score because of it. Most lenders like to see this utilization rate below 30% so, pay your existing debt down if they are above 50% to give you a better chance at getting approved for a new loan at a good interest rate.

15% - Length of Credit History - The system will take into consideration the length of time you have had your existing lines of credit.

The older the account the better rating it gets (as long as it is in good standing). The longer you’ve been paying your bills responsibly and on time, results in a good track record that lenders will feel comfortable with in giving you those “big ticket” loans; home, auto, etc. It will also translate into a better interest rate for you, saving you thousands of dollars in the long run.

10% - New or Recent Credit Lines Opened - Don’t be too quick to open or apply for so many credit cards or loans at any given time. It can indicate to a lender that you are desperate and in dire need of a credit line. It also can result in multiple lenders pulling your credit report in a short period of time. These inquiries also affect your credit score.

You can pull your own credit reports anytime you want to and that will not affect your score.

10% - Types of Credit Cards used - Contrary to popular belief, a debit card with the Visa or MasterCard logo isn’t a credit card and does not help your credit profile. The FICO system calculates revolving credit cards (Visa, MasterCard, Amex, etc.), department store credit cards (JC Penney, Mervyn’s), Automobile Loans, Mortgages. Each type of line of credit has a different value assigned. A good payment history on a department store card doesn’t have the same weight as someone who is making payments on a mortgage or auto loan.

So, how does your FICO score translate into the interest rate you can expect on a loan (if you qualify)? Here is an example using a $216,000 30-year, fixed rate mortgage:

So you need to apply for a new credit card. Well, have you thought about applying for it online?

All of the major credit card issuers, and most of the minor ones, now allow you to apply via their websites. This offers a number of advantages compared with the old method of filling in a paper form and sending it by snail mail.

One big advantage is speed. Your application will be instantly received by the card company and at least some of the processing will be handled automatically. Admittedly the card issuer will want to make certain checks with credit reference agencies to ensure that you are creditworthy, so you shouldn't expect an immediate yes or no. However, the waiting period between applying for the card and getting approval for it is likely to be as much as a week less compared with the traditional method of application.

Another big advantage of applying for a credit card on the Internet is that it is very easy to research the best credit card offers. Nowadays there are hundreds of different credit cards available, all offering different combinations of terms and incentives. It is very important to study the market carefully, therefore, rather than simply filling in the first application form that arrives in your mailbox. Independent credit card comparison sites such as http://www.finest-credit-cards.com make this easy by listing all the best current credit card offers, updated daily.

Once you have found a card you are interested in, go to the issuer's website and study all the details of their offer. Check in particular for low introductory rates, cashback offers and balance transfer deals. If you are happy that this is indeed the card for you, look for a button labelled "Apply Now" or similar. Click on this and a new page should open, with an online application form ready for you to fill in.

The details you will be asked for are just the same as when applying for a card by mail. They will include your full name, address, telephone number, occupation, annual income, and so on. You are also likely to be asked some security questions, e.g. your date of birth, social security number and mother's maiden name. These are used to help prevent fraudulent applications.

Once you have completed the form to the best of your ability, click on Submit, and click again to confirm your application if requested. If you have omitted any information or filled in any parts of the form incorrectly, you will be asked to try again. Otherwise, you will see a message that your application has been received. All being well, you will then receive approval of your application within a few days, and the card itself shortly after that.