by Joseph Kenny | 10/23/08

Credit cards are one of the best ways in which you can raise your credit. Even with the economy in poor shape, you can expect to develop a wonderful credit score if you pay attention to your balance and pay your monthly bills completely and on time. However, as simple as it sounds, the card issuers are suffering from the results of the credit crunch which is leaving them rather skittish.

It used to be that credit card companies issued cards out left and right. Any adult could obtain one whenever they pleased, and it only a matter of signing off to certain terms and conditions in order to get that shiny plastic in the mail and on its way to your address. However, with the way the economy has taken a downward turn this year, things have changed in this regard, and credit card companies are more cautious than ever to risk what they have on those who are prone to late payments and general financial delinquency.

The companies behind credit cards used to thrive on those who were irresponsible with their so-called plastic. By being late with payments or failing to pay the monthly minimum, card issuers could tack on fines and hike interest rates to gouge those who don't handle their cards with perfect attention to detail. This was a very profitable way of handling business, and led to issuers to give anybody a card because it was a situation that would get them more in the end even with tardy consumers.

Today, that strategy is faltering because cardholder delinquency is increasing at a rapid pace across the country. The sluggishness of the economy and a decline in employment has led to increasing debt which is destroying card company profits. Because of this and several other factors related to the economy, card companies are tightening the standards that apply to obtaining a credit card.

Generally speaking, card companies are still offering plenty of opportunities to obtain a card and allow you to continue utilizing your current one. However, you have to really be careful with how you handle your card in order to preserve your credit and prevent the possibility of creating long-term debt.

Currently, credit card companies are trying to eliminate their risky customers and replace them with borrowers that are of a lower-risk profile. This means that they monitor existing credit card accounts and look at the performance of the holders behind them. If there's any sort of changes in payment behavior that's suspicious, then these companies could take one of several actions that can negatively impact the holder's credit or remove their card privileges entirely. It's harsh, but so is the current economy, so the best thing you can do as a current or would-be card holder is to treat your credit card with respect.

You want to make certain that you pay your debts on time and in full, and not to raise your balance towards the limit given to your card. Even if it stays within the limit, credit card companies will see this as a sign of financial weakness, and could target you for one of several actions that can inhibit your ability to pay your balance, such as raising your interest rate. Avoid this by avoiding a heavy balance on your card, and you'll stay safe and dry, above and beyond the risky waters of debt.