Suppose you’re looking for a new credit card or want to improve your chances of being approved for a particular card. In that case, you need to know about the five factors that credit card issuers look at when considering an application. By understanding these factors and taking steps to improve your credit score and credit history, you can give yourself the best chance of being approved for the card you want.
Check your credit score and credit report for errors.
You can get a free credit report from AnnualCreditReport.com. Credit reports are also sometimes called credit histories or credit files. Reviewing your credit report will give you a good idea of where your credit stands and whether any red flags could hurt your chances of getting approved for a credit card.
If you find any errors, dispute them immediately with the credit bureau. You can do this online, and it doesn’t have to be a long, complicated process. Explain what the error is and why you believe it’s incorrect. The credit bureau will investigate and get back to you with their findings. Your credit score is essential because it is one factor that lenders look at when considering your credit card application.
If you have a low credit score, you may want to consider ways to improve your score before applying for a credit card. For example, one way to improve your credit score is by paying your bills on time. Another way to improve your credit score is by using a smaller percentage of your available credit limit. And finally, avoid opening too many new lines of credit at once, which can also negatively impact your score.
No matter where you turn for your credit check-in — your bank, Credit Karma, or one of the major consumer credit bureaus — it’s essential to keep an eye on your credit. And if you find any mistakes or inaccuracies, we can help you file a dispute. If the credit bureaus approve your argument, you may see the error corrected as soon as within 30 days, which can help raise your credit scores.
Pay your bills on time to improve your credit history.
Keep your credit utilization ratio low by not charging more than 30% of your available limit. This is the amount of overall debt you have, divided by the total amount of revolving credit that you’ve been extended. Most experts agree that it’s best to have an obligation to credit ratio of less than 30%, although a lower ratio is always better than a higher one, and there’s no magic number.
If you pay off your credit card balances before your statement closing date, your credit report will show no debt, which will help your application for new credit. Just make sure to wait until a few days after your statements close before applying for a new credit card to give time for the unused balance to be reported to the major credit bureaus.
If you have a good credit score, you may want to ask for a higher limit on your current card. This will improve your credit utilization ratio and help boost your score. You can also try opening a new credit card account with a low interest rate to reduce your overall debt burden further.
Keep a low balance on your credit cards to show you’re responsible for the debt.
Every time a credit card’s monthly statement cycle closes, it generates a statement and reports that statement balance to the three major consumer credit bureaus. At that moment, the card issuers have no way of knowing if you’ll eventually avoid interest charges by paying off the statement balance in full by the due date or if you’ll continue carrying a balance month-over-month and rack up costly interest charges.
When you carry too high of a balance on your credit cards from month to month, it looks like you’re struggling financially and maybe a more significant risk for defaulting on your credit card debt. This is why it’s essential to keep your balances as low as possible so that when the creditor pulls your credit report, they see that you’re managing your finances responsibly.
If you want to improve your odds for a credit card approval, it pays to do some work in advance. You can improve your odds for approval by preparing before submitting your application. And, you’ll be more likely to earn better terms on your newly opened card.
If you have multiple cards with balances, try to consolidate those debts onto one or two new cards instead of keeping them all open. When you have multiple cards with balances, it looks like you’re overextended.
Don’t apply for too many cards at once – spacing out your applications will look better to lenders.
Having too many cards open can hurt your credit score, so be mindful of your credit utilization ratio.
Credit card companies are looking for borrowers who are responsible for debt and have the ability to pay back what they owe. So they look at the payment history of your accounts and your credit utilization ratio to determine if you’re a high-risk borrower.
To boost your chances of getting approved for a new credit card, keep a low balance on your existing cards, and don’t apply for too many cards at once. Spacing out your applications will give you a better chance of being approved, and having too many cards can hurt your credit score.
Be mindful of your credit utilization ratio and keep it below 30%. If you have a good payment history and low balances, you’re more likely to be seen as a responsible borrower by lenders.
Apply for a secured card if you’re not quite ready for an unsecured card.
A secured card requires a security deposit, which reduces the risk for the lender. This can help boost your approval chances. Secured cards also come with low limits, which can help you stay within budget and improve your credit score over time.
A credit card issuer may also consider your income and employment history when you apply for a card. Be sure to list any sources of income, such as alimony, child support, or part-time jobs. If you’re self-employed, include information about your business. The more information you provide, the better your chances of approval will be.
Use a co-signer if you need help getting approved.
If you have a limited credit history, you may need to use a co-signer to get approved for a credit card. A co-signer is someone who agrees to be responsible for your debt if you can’t pay it back. This can be a family member or friend with good credit.
If you’re not able to get approved for a traditional credit card, there are plenty of other options available. For example, you could get a secured credit card, which requires you to put down a deposit that becomes your credit limit. Or you could get a prepaid debit card, which doesn’t require a credit check.
Whatever option you choose, make sure you use your new credit card responsibly to build up your credit history. Pay your bills on time and keep your balance low to improve your chances of getting approved for a traditional credit card in the future.
Mix it up.
Your credit mix refers to the various accounts included in your credit reports. While it probably won’t make or break your credit scores, lenders typically like to see a mix of revolving credit accounts (i.e., credit cards) and installment loans, like mortgages, auto loans, and student loans. The more you diversify the money you borrow, the better.
One way to mix up your credit is by opening a new account with a different type of lender. If you’ve only ever had credit cards from big banks, try applying for one from a local credit union or online lender. You might be surprised at how much easier it is to get approved. Just make sure you shop around for the best interest rates and terms.
Make sure you’re comfortable with the card’s terms before you apply.
The last thing you want is to get approved for a card with terms that aren’t favorable. Consumers with good credit scores (typically FICO scores of 690 and up) are not immune to the recession’s impact on credit limits. However, they tend to be the last ones to lower their credit limits and the most likely to still qualify for a loan or credit card, Ulzheimer says. So if you’re eyeing a credit card but have less-than-good credit, focus on your credit scores.
Before you fill out an application, take the time to review your credit report. This way, you can ensure that all the information being reported is accurate. If there are any errors, dispute them before applying for a new card.
If your credit score isn’t where you want it to be, you can do things to improve it. One option is to sign up for a credit monitoring service. This way, you can keep an eye on your score and work on improving it over time.
Following these steps will not only improve your chances of getting approved for a credit card, but can also help you receive a higher credit limit, better terms, or even an excellent credit score. Just remember to keep your credit card balances low and make payments on time, and you’ll be well on your way to financial success.