When you apply for a credit card, the issuing company most often uses your credit score (combined with a number of other factors) to decide whether or not you qualify for their best rates of interest. Knowing your credit score can help you compare credit cards for which you'd like to apply for and get and decide which one is the best for your use. Understanding what your credit score means will allow you to apply for the credit cards for which you are most likely to be accepted and this in turn ensures that you keep your credit history free from failed applications which can have a negative effect.
There's nothing terribly mysterious about your credit score. In a nutshell, it is a single number that represents how credit-worthy the credit reporting agencies consider you to be. Your credit score is compiled by assigning a number value to every entry in your credit report, and then totaling them all together. The credit card companies then compare your credit score with the credit score of their ideal customer, and decide whether or not to grant you a card, and at what interest rate they are willing to extend credit to you.
The factors that influence your credit score vary from company to company. The most important factors are your payment history, the amount you owe, the length of time you've had credit, any new credit that you've been recently issued and the types of credit that you use. Paying bills on time and in full will increase your credit score. Missing payments or paying them late will decrease it. The longer you've been responsibly using credit, the higher your credit score will be. New credit cards and applications for credit can lower your credit score.
Even knowing the number of your credit score won't always tell you much about how likely you are to be approved for a credit card. There are a number of different credit rating scales, so knowing your credit score is only helpful if you know which scale is being used. In general, though, the higher your credit score, the more credit-worthy you'll be considered and the lower the interest rates you'll be offered when you apply for a credit card.
