How Does Credit Card Ratings Work?

What Are Credit Card Ratings?

Several companies have sprung up in the last decade that compare credit cards, rate them and then report their information to the public. A consumer advocacy group started researching credit cards in 1998, because of the rise in credit card debt. Now there are many companies who rate credit cards, however if you are looking for one, make sure they are independent of any banks that issue credit cards. After the many components that make up the credit card and the bank that is issuing them are compared, the rating company gives it a rating. The companies use different systems, some much more comprehensive than others. Most commonly the system used to rate the cards are with stars. The more stars a credit card gets, the higher the rating.

What is Compared?

Criteria used in rating credit cards vary among the companies. All of them will compare the similar cards, such as reward cards to other reward cards or airline cards to airline cards. Other popular criteria are annual fee and interest rate. They will use reviews from other independent sources and from the cardholders themselves. Some even go so far as to call the issuing company and ask questions as if they were a customer to review their customer service. Then they are broken down into categories and compared again. Some of the categories are Business Credit Cards, Student Credit Cards, Low Interest and Bad Credit Credit Cards. After all the data is entered, the cards are compared and the results are published so the consumer can just look in one place to get the best credit card for them.

Other Helpful Information

All of these companies recommend that you know your credit score going in. This way you will not apply for a card with a good interest rate, only to find out your score doesn't meet their criteria and you end up with a higher rate. Most of the rating companies also have other helpful information, such as how to raise your credit score and credit counseling services. Lately, there has been more and more information on what to do if your identity has been stolen. And most offer credit card education. These companies have become an important tool in today's confusing credit card bombardment. They have a wealth of information to use and it's worth reading it, even if you're not in the market for a credit card right now.