Advertisement
Canada markets closed
  • S&P/TSX

    21,639.10
    -59.00 (-0.27%)
     
  • S&P 500

    5,431.60
    -2.14 (-0.04%)
     
  • DOW

    38,589.16
    -57.94 (-0.15%)
     
  • CAD/USD

    0.7279
    -0.0005 (-0.07%)
     
  • CRUDE OIL

    78.23
    -0.22 (-0.28%)
     
  • Bitcoin CAD

    91,244.20
    +416.75 (+0.46%)
     
  • CMC Crypto 200

    1,409.55
    -8.32 (-0.59%)
     
  • GOLD FUTURES

    2,341.30
    -7.80 (-0.33%)
     
  • RUSSELL 2000

    2,006.16
    -32.75 (-1.61%)
     
  • 10-Yr Bond

    4.2130
    -0.0250 (-0.59%)
     
  • NASDAQ futures

    19,688.75
    +3.25 (+0.02%)
     
  • VOLATILITY

    12.66
    +0.72 (+6.03%)
     
  • FTSE

    8,146.86
    -16.81 (-0.21%)
     
  • NIKKEI 225

    37,984.23
    -830.33 (-2.14%)
     
  • CAD/EUR

    0.6799
    +0.0001 (+0.01%)
     

How I Learned To Stop Worrying And Embrace The Credit Card

It took a year and some change before I embraced the travel rewards card, or really any credit card for that matter.

Ever since paying off $3,000 in credit card debt, I was convinced my finances had to be pristine in order to justify opening a new line of credit.

So I hadn't used a credit card at all.

I'd been doing just fine without it: I paid for everything in cash or with a debit card, which helped me track my spending and saving.

The problem was, my strategy wasn't realistic. Sometimes you just need a credit card.

I decided to book a trip to Ireland this year. And I realized I'd be screwed if my wallet got stolen, debit card and cash inside.

ADVERTISEMENT

Paying for hotels and restaurants, or purchasing rail tickets from machines would also be a pain. Plus, if disaster struck, obviously I wouldn't be footing the tab in euro coins.

Realizing I had no choice, I launched the application process by pulling my credit score. It was 702: not bad, not great.

I worried what the hard inquiry—what happens when a card issuer pulls your score from one of the three major credit bureaus—would do to my standing.

Would the 0-5 point ding drag me down to uncreditworthy territory? What if I got denied for a card, and had to apply for another only to get denied again?

With only three weeks left till Ireland, I had to lock down a credit card and fast. I tapped the experts to find out my options. Here's what I learned:

Hard inquiries only appear after the fact. Beverly Harzog of Credit.com allayed my fears, saying, "Even if you apply for a new card, you'll make it into the good category just barely. It'll ding your score, but only after they look at it." This gave me the greenlight to apply for a card.

Apply for one card at a time if your score is so-so. "If you apply for too many cards at once, it'll look like you're desperate for credit to the issuers," said Harzog. At most, I could apply for two cards without raising any card issuers' red flags.

The higher the score, the more leverage you have. Clearly, I was facing a less-than-stellar APR and a lower credit line. But a couple years ago, it would have been worse, credit issuers were just that wary of unreliable cardholders. Post-recession, consumers with golden scores of 750 and above are being wooed with attractive credit offers, including 0% introductory rates.

It's not just about the score. My whole credit picture—how diligent I am about paying off bills, my card balances and how many cards I've had and for how long—all going to factor into a credit issuers' decision to extend me credit, said Harzog. I was good on those fronts, so now the score was the least of my worries.

Sometimes it pays to aim lower. Said Justine Rivero, expert with CreditKarma.com: "Opening up a new credit card that you have a good chance to be approved for can be a smart move, so you don't waste that hard inquiry to your credit score." Admittedly, I blew this point off, but it seemed like a good way to counter the issue.

I'll save how I found the right card for another post, but I'm glad I got past my fears to apply for a credit card. There's no doubt I'll need one while traveling abroad, and if financial disaster strikes, I feel secure knowing that I'll be covered.

Don't miss: How I clawed my way out of debt to pay off my credit card >

More From Business Insider