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Credit card application tips: How to get approved for a credit card
These 12 tips can increase your chances for credit card approval.
While credit card applications aren’t typically complicated, it can come with certain risks. After you’ve applied for a card, the issuer will look at your income, credit history and the documents you’ve provided in your application to determine whether you’re a high or low-risk applicant. The lower risk you are, the better your odds of approval. There are a few ways to improve your chances of approval when applying for a new credit card.
What’s in this guide?
What to do before you apply for a new credit card
The pre-application process is considerably more important than the act of applying itself. While it may take only 15 minutes to fill out the form, getting your affairs in order so that you’re ready for the bank’s assessment of your application will take a bit more time and preparation.
Tip #1. Take your time
It’s never a good idea to rush into things, and it is your right as a consumer to assess the bank before it assesses you. Don’t jump at the first credit card deal you see because that’s usually not going to be the right one for you. Instead, spend some time comparing your credit card options so you can find a card that suits your financial needs.
Tip #2. Know your needs
Different types of credit cards suit different types of people. Before you begin your search, spend some time considering what you want, need and can afford. For example, if this is the first credit card you’re applying for, you might want to apply for a student credit card. Learn more about how to choose the best card for your needs so you don’t regret your decision later.
Tip #3: Compare your options
Once you’ve decided what type of card you want, it’s time to begin comparing your options. Using the reviews on finder.com, you should compare the following to ensure you understand the costs and benefits associated with each card.
- Interest rates on purchases, cash advances and balance transfer
- Annual fees
- Interest-free periods
- Rewards programs including the partnered program, earn rates and how you can earn and redeem points
- Complimentary insurances including travel insurance, purchase protection and extended warranty cover
- Additional cardholders and whether they come with an additional fee
- Extra benefits such as concierge services and airline lounge passes that’ll help you offset the costs of the card
Tip #4: Check the eligibility requirements
You’ll need to meet a set of eligibility requirements to be approved for any credit card you apply for. Make sure you confirm that you meet the eligibility criteria before you submit your application, as rejected credit card applications can have a negative impact on your credit score. In the U.S. credit card market, the eligibility requirements usually include:
- Age. Cardholders must be at least 18 years of age.
- Residential status. Credit card issuers usually require you to be a permanent U.S. resident or hold a specific visa to apply for a credit card.
- Good credit history. You’ll need to have a good credit history with no defaults or evidence of bankruptcy to receive approval. See this guide for five ways to improve your credit rating.
There are specific eligibility requirements for every credit card, so make sure you know what these are and are confident you have met them before applying.
Some banks allow you to submit information prior to the proper application process to get an idea of whether you’ll be approved. This is called pre-qualification or pre-approval and can help steer you away from cards that might prove out of your reach. Since applying for a credit card can affect your credit score, pre-qualification can help you nab a card without paying the price of trial and error.
Tip #5: Check your credit rating
Banks typically use a credit rating system when assessing your eligibility for the card and card limit in question. Based on your credit history, repayment habits and current credit lines, the lender will work out how much you can safely borrow. This credit range is typically measured with a numeric score separated into four categories:
- Poor: 579 and below
- Fair: 580-669
- Good: 670-739
- Excellent: 740 and above
This information is available to lenders whenever you apply for any form of credit. You can also access your credit score at any time, and request a free copy of your credit history before applying. That way you can correct any possible errors on it and see exactly what the bank will be seeing when they assess your application. If the report is less than ideal, it may be wise to delay your application and spend some time improving your credit score to increase your chances of future card approval.
Tip #6: Improve your credit score
If your credit score isn’t quite up to snuff for the card you want, hold off on your application and try a few strategies for improving your credit score. Depending on the cause of your low score, you could see improvements after just a few actions, such as clearing some debts in collection. If you feel there’s an error listed on your credit report, such as the existence of a debt you’ve already paid, you can have that error corrected with the credit bureaus.
Tip #7: Lower your credit utilization ratio
If you already have a credit card balance, it’s wise to pay off your existing balances before submitting a new credit card application. This is because having a high debt utilization ratio is an indicator of poor credit-worthiness, which can reduce the likelihood of a successful application. To calculate your ratio, divide the total current balances on your cards by their total limits.
For example, if the limits on your three cards are $5,000 each, and you have $4,000 balance on each of them, your ratio is $12,000/$15,000 = 80%. A healthy ratio is typically 30% or less. If you’re struggling to repay your debts because of high-interest rates, consider consolidating your debt with a 0% balance transfer credit card.
Tip #8: Open a credit card with your existing bank
Opening a savings account or debit account with the bank you’re applying with could help with the application process. Most significantly, if you have a transaction or savings account with them, it proves that you have a paying job and a regular income stream. Applying with your existing bank can also speed up your overall application process as the bank will have many of the details they already need to process the application.
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Tips to remember during the application process
Once you’ve done some research, ensured you’ve met the eligibility requirements and selected a card, you can apply for your chosen credit card. While filling out your application, make sure to keep the following tips in mind:
Tip #9: Be careful with the details
You’ll be asked to provide a lot of information during your application including addresses, contact numbers, referee details, current and previous employment, salary, outstanding debts and monthly expenses (just to name a few). While it might seem like a lot of information, it’s important to fill it out correctly and read over it before submitting the application. Mistakes on your application could slow down the process or result in a declined application. For instance, if you omit details of an outstanding balance and the bank later finds it on your credit file, they could think you’re trying to hide the debt from them and could decline your application.
Tip #10: State your actual income
This is no time to be modest or to exaggerate your income. Deflating your income may sabotage your application by reducing the bank’s opinion of your ability to finance a debt. Whether you’re likely and able to repay is one of the biggest factors lenders observe when issuing. So if you have multiple sources of income (such as from part-time employment, freelance jobs or government payments), make sure to include these details. Fabricating or inflating your income, on the other hand, is considered fraud and punishable by law.
Mistakes to avoid when applying for a credit card
Aside from the tips to follow before and during your application, the following are common mistakes to avoid if you want to increase your chances of approval.
Tip #11: Don’t apply for multiple cards at once or within a short period.
You may be tempted to apply for a second card just in case your first one doesn’t get approved, but don’t. Each credit inquiry that a lender makes about your credit history leaves a new mark on your credit file for five years. If you apply for many cards at once or during the same period, it would appear to every subsequent lender that you have a lot of debt, even if that isn’t true. This could leave you in a vicious cycle of applying for credit cards and not having them approved.
In fact, some banks will automatically reject your application if you’ve recently applied for a credit card. For example, Citi states in its terms and conditions that your application may not be approved if you’ve applied for and been accepted for another Citi offer in the prior nine months. Others, like Chase, monitor all card accounts you’ve opened and adjust their approval accordingly.
Tip #12: Don’t apply for balance transfers between cards funded by the same bank.
Note that you can only transfer the balance of a card that isn’t funded by the same bank as your new card. This can be tricky because it’s not always clear which bank funds what credit card. To ensure you know which banks you can transfer between, see our detailed guide.
Applying for a credit card is a relatively simple process and can take as little as 15 minutes. However, if you don’t do your research beforehand, ensure you meet the eligibility requirements and prepare the necessary documents, you’ll reduce your chances of approval. To start your research, compare credit cards to find one that best suits your financial and personal needs.
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