Credit card application tips

11 steps to increase your chances of approval when you apply for a credit card.

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While applying for a new credit card only takes a few minutes online, it does come with certain risks. After you’ve applied for a card, the credit card 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. Essentially, they’re looking for signs that you have the ability to repay the money you borrow.

While making sure you meet the eligibility requirements is crucial, there are some other ways to improve your chances of approval when applying for a new credit card. Use this guide’s 11 tips to increase your chances of getting approved for a credit card, including what to do before you apply and submit your application, plus the mistakes to avoid when requesting a new credit card.

How to prepare before you apply for a credit card

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What you do before you apply for a credit card is actually more important than the act of filling out the application. While it may take only 15 minutes to complete the online 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 and doing your research so you can find a card that suits your financial needs.

Tip #2. Know your needs

There are many types of credit cards that suit different types of cardholders. Before you begin your search, think about what you want, need and can afford with your next credit card. For example, if you’re studying and this the first credit card you’re applying for, you might want to apply for a low-income credit card to ensure you meet the eligibility requirements. On the other hand, if you also want to keep your interest costs down, then you might decide to apply for a low rate credit card.

Even if you already use a credit card, it’s worth taking this time to reconsider your goals. For example, if you’re a regular spender who regularly repays their balance, you could get rewarded for your spending with a frequent flyer credit card. If you have some big ticket items in mind but want to keep your interest costs low, a low purchase rate credit card could come in handy. Otherwise, if you’re struggling to repay an existing debt, balance transfer credit card with a 0% promotional offer could help you get your finances in control. Whatever the case, getting specific about the type of card you want will help you find one that fits with your circumstances.

Tip #3: Compare your options

Once you’ve decided what type of card you want, it’s time to begin comparing your options.

What do I need to compare?

  • 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

Comparing your credit card options will help you narrow down your search and will ensure that you’re selecting your next card based on an informed decision.

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 New Zealand the eligibility requirements usually include:

Credit card eligibility requirements

  • Age. Cardholders must be at least 18 years of age.
  • Minimum income. You’ll need enough income to feasibly repay the credit limit on your chosen card.
  • Residential status. Credit card issuers might require you to be a permanent New Zealand resident for some cards.
  • Good credit history. You’ll need to have a reasonable credit history to receive approval.

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.

Tip #5: Check and improve 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 information is available to lenders whenever you apply for any form of credit.

Your credit report is also available to you at any time. If you request a free copy of your credit history before you apply for a credit card, you’ll be able to correct any possible errors on it and know exactly what the bank will see when they assess your application. If your credit report is less than ideal, it may be wise to delay your credit card application and spend some time improving your credit score to increase your chances of future card approval.

Tip #6: Lower your credit utilisation 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 utilisation ratio is a poor indication of credit-worthiness and reduces the likelihood of a successful application. To calculate your ratio, you can divide the total current balances on your cards by their total limits.

How to lower your utilisation ratio

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 might be around 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 #7: Bank with your credit card provider-to-be

Opening a savings account or debit account with the bank you’re applying with could help with the application process. Firstly, it will significantly speed up your application, because you’ll become an existing customer. This means the bank will have already verified that you are a legitimate customer before you apply for a credit card.

Secondly, if you have a transaction or savings account with them where your salary is deposited monthly, it proves that you have a paying job and a regular income stream. If you apply online and do it via internet banking, your application becomes even faster because your details could be pre-populated on the forms. As long as you meet the eligibility requirements, being an existing customer can sometimes mean you get approved for a credit card more quickly than other applicants – without the hassle of providing further documentation.

What to remember during the credit card application process

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Once you’ve done some research, found a credit card you like and checked that you meet the eligibility requirements, you can apply for your chosen credit card. When you’re filling out your application, make sure you keep the following tips in mind:

Tip #8: Check your details

You’ll be asked to provide a lot of information during your credit card application. This might include addresses, contact numbers, referee details, 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 don’t include 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 decline your application.

Tip #9: Organise the required documentsccf-application-tips-250x250

As well as eligibility requirements, you’ll be required to provide a number of documents with your credit card application. Supporting documents you’ll typically be asked for include your driver’s licence, proof of residential status, recent payslips and tax return. Make sure you confirm what you need to provide before you start the application to ensure a swift and successful 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. 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, might be considered fraud.

Compare credit cards for 2019

Updated October 15th, 2019
Name Product Purchase rate (p.a.) Annual fee Minimum Income
N/A
$1,250 p.a.
$100,000
A charge card with premium travel benefits and up to 80,000 Membership Rewards Bonus Points when you spend on your card within the first 3 months.
2.99% for 6 months (reverts to 19.95% APR)
$149 p.a.
$50,000
Enjoy a low rate on purchases and earn 20,000 Membership Rewards Bonus Points if you apply, are approved and spend $750 in the first 3 months of Card membership.
19.95% APR
$195 p.a.
$65,000
Receive 300 bonus Airpoints Dollars when you apply by 14 October 2019 and are approved. Spend a minimum of $1,500 in the first 3 months and earn 1 Airpoints Dollar for every $59 you spend on your card.
0% for 6 months (reverts to 19.95% APR)
$0 p.a.
$35,000

Be rewarded with 50 bonus Airpoints Dollars. Simply apply, be approved, and spend $750 on your new Card in the first 3 months of membership.

Compare up to 4 providers

Mistakes to avoid when applying for a credit card

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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 more than one credit card just in case your first one doesn’t get approved, but don’t. Each credit enquiry that a lender makes about your credit history is listed on your credit file for five years. If you apply for a lot of credit cards at once or within a few months, it could appear to lenders 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.

Pictures: Shutterstock

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