Discover Debt Freedom!

Getting the lowest credit card interest rate that you qualify for can be a difficult endeavor because of all of the criteria that goes into calculating the interest rate for a credit card.  Different credit card issuers have different qualifications and different interest rate ranges for many of the different types of credit card products that they sell, making it even more difficult for a person to determine whether they are getting the lowest market rate or if they are being taken advantage of by the lender.  There are several criteria that nearly all creditors take into consideration when calculating a credit card interest rate and knowing where you fall within these standards can help you determine whether you are getting the lowest credit card interest rate for your current situation.

Credit History

One of the biggest factors in the credit card interest rate offered to you by a creditor is the information contained in your credit history.  Your credit history can reveal to the credit card issuer whether you are a credit risk and do not pay your bills on time or whether you are responsible with the credit that you have and should be extended additional credit.  The more of a risk you seem to be, as indicated by the information in your credit report, the higher the interest rate charged for the credit card will be.

Most creditors are interested in reviewing the late and missed payments that appear on your credit report for as many as 7 years after the actual event.  A large amount of late or missed payments show that you are having difficulty managing your money properly and have a good chance of defaulting on any additional credit that is extended to you.  Late and missed payments on your credit history will result in a higher interest rate for credit card products.

Credit Score

Another factor that can alter the credit card interest rate offered to an individual is their personal credit score.  A person’s credit score is a numerical calculation that takes a number of different dynamics, such as percentage of credit used and length of time different credit products have been open, to place the person on a sliding scale of financial stability.  Individuals that have used their credit wisely, have made all of their payments on time, and have not maxed out all of their credit products will fall on the higher end of the credit score scale and be offered the lowest interest rates for credit cards.  Individuals that have had trouble making their payments, use most of their available credit, and have racked up high debt levels will have a much lower credit score and will have to pay higher interest rates to obtain the credit cards they desire.