If a person applies for a credit card with a credit score of 600, will that person get a higher interest rate, than a person with a 700 credit score applying for the same card? The reason I ask, is because I was wondering what happens when that same person raises their credit score, does the interest on their credit card automatically go down? Or are they stuck with that initial interest rate. Is it a permanent interest rate, like most loans? I assumed if you’re approved for a credit card, everyone received the same interest rates for that credit card, and one of the main/only differences was the credit limit between cardholders of the same credit card. I know there are sometimes promotional interest rates, but those are exceptions to my question. Because I’m thinking of waiting a couple months before I apply, so that my credit score can be around 750. I’m assuming a higher score than that won’t make a lot of difference in interest rate.
Do credit scores affect credit card interest rates?
byu/Greystorecombo inCreditCards
Posted by Greystorecombo
3 Comments
Many cards have different tiers of rates. So on the standard disclosure form you might see something like 19.99%-29.99% APR, and the offered APR when you apply depends on your score at the time.
More importantly though: you shouldn’t care about APR. If you use a card responsibly and pay it off in full every month, the interest is $0 whether the APR is high or low.
Yes your initial score definitely affects the APR you get approved for – banks use tier system where better scores get lower rates from start. Most cards dont automatically lower your rate when score improves but you can call and request rate reduction after like 6 months of good payment history
Yes, it’s called risk-based pricing.