How to Boost Your Credit Card Approval Odds
When you’re just beginning your journey into financial independence, starting out can be a little tough. Breaking out into the credit world isn’t easy, but keep in mind that just about everyone begins at the same place: the bottom.
The credit game is a bit of a contradictory cycle: you must have good credit to be considered from a credit card from lenders, but you need a credit card to have good credit. It’s a frustrating place, but there are ways you can boost your credit card approval odds when you’re starting out.
Applying for a Credit Card
You can apply for a new credit card account online, and the process usually entails filling out an application with basic information like your name, address, date of birth and other contact information. In most cases, approval isn’t instant and for some credit card companies can take a week to approve or reject your application.
There’s always the option of calling a credit card company and applying over the phone. Completing your application this way may speed up your request as opposed to doing it online and waiting for an answer in the mail.
If you’re denied credit from the company to which you have applied, you’ll receive notice from them in a detailed response called an Adverse Action Notice. This notice must provide a reason as to why you were denied by the lender as required by law.
There’s a high chance that denial is central to your credit score, and if your score isn’t high enough, the lender may see you as a risk and won’t want to extend a line of credit based on your history. Your credit report or score can reflect a history of late payments, too much debt, too many recent applications for new credit or you simply don’t meet their criteria.
Boosting Your Odds
If you’ve been rejected after submitting your application, you’re probably feeling sore and wondering if there are things you can do to boost your odds to finally gain approval from credit card companies and credit lenders. You can take solace in the fact that you definitely aren’t alone. Obtaining good credit is a difficult task and it requires due diligence, persistence, and being smart about your cash.
Get to Know Your Credit History and Credit Score
You can’t boost your odds without knowing what your odds currently are, or otherwise you’ll be shooting in the dark when it comes to your credit applications. Your credit report will shed light on your current standing, and the best part is, you can go to AnnualCreditReport.com and request free copies. There are three major credit bureaus that produce credit reports: TransUnion, Equifax and Experian. All three of these companies have different procedures and processes when it comes to updating your credit reports.
This means that your credit reports can vary, so be sure to request reports from all three to get a clearer picture of your credit history and status. You can request one free copy of your credit report every 12 months from each bureau, as upheld by the law.
Your credit score is based off of the information within your credit reports, and you’ll want to see what your score is and not just rely on what your reports are telling you. Your lenders will look at your credit score or your credit reports, and in some cases, they will examine both in order to determine your eligibility. Check your FICO credit score to get a clearer picture of your financial wellbeing, as your lenders will be doing the same.
Apply for Cards that Fit You
You now know where you stand in terms of your credit score, your credit reports, and how lenders may view you. Whether this is good or bad is only part of the equation. Utilize your insight to apply for credit cards where you fit the desired candidate criteria, for example, don’t waste your time or the lender’s time by applying for a platinum or elite tiered card where the annual fee and the rewards are high, as these cards are designed for high credit scores.
Instead, apply to cards that are meant for people in your credit score range. Yes, the rewards won’t be as appealing, and the interest rates may be on the higher end, but your working towards building your credit so you can eventually get an attractive travel rewards card. There are plenty of online tools you can utilize to determine what card best fits your score, thus greatly heightening your approval odds.
Read the Fine Print
If you already have a few credit cards, either spread out or from the same issuer, and are looking at applying for more, read the fine print to see if there are any stipulations that could prevent you from holding another account with them.
Credit card companies like American Express limit four accounts per person, and Chase limits one personal and one business card for every 90 days. If you apply for another card and these regulations are in place, then you could be rejected because of them.
Work to Reduce Your Balances
You won’t want to, but put yourself in the bank’s shoes: extending credit to someone with multiple balances spread out over a few different credit cards, even if the balances are low, can seem as if that person is over-extended on their credit and could easily default on a payment. Naturally, a bank will want to avoid that at all costs, and this can be one of the reasons behind a possible rejection for a loan or credit account.
Even if you’re diligent in paying off statement balances and avoiding interest, you should work to make your debt zero. Doing so will make you more attractive to lenders.
Include All of Your Income
Some people don’t realize that they can report income from eligible sources like alimony, child support, disability, and other avenues when applying for a credit account. The CARD Act put forth by the Consumer Financial Protection Bureau dictates that consumers are allowed to include all household income that they have reasonable access to, the reason for this amendment being to grant a fair chance of approval for non-working spouses.
Pay Off Balances from the Same Card Issuer
If you’re applying for a new card but are have an existing credit card account with the same company, it’s a good idea to pay off all of your existing debt with this issuer before submitting your application. This is not only a polite gesture, but shows you take your payments and credit standing seriously and want to build a good relationship with this lender.
Staying the Course
As you make timely payments and avoid interest with your debt to further higher your credit score, you’ll in time, see your odds immensely improving in gaining credit approval from lenders.
As you do this, remember these tips to solidify your good standing with your credit and you’ll begin to see an increased chance of success in your overall credit applications. Remember, boosting your credit score and your approval odds takes time and determination, so stay the course and you’ll be rewarded.