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Credit card application tips
How to increase your chances of approval when applying for a new credit card in 12 steps.
While applying for a credit card doesn’t have to be complicated, it can come with certain risks. After you’ve applied for a card, the credit card issuer will look at your income, expenditure, credit history and any documents you’ve provided in your application. They do this 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 for 12 tips to increase your chances of approval including what to do before you apply and how to submit your application, plus mistakes to avoid.
How to prepare before you apply for a 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 not always 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 available on the market to suit different types of cardholders. Before you begin your search, spend some time considering what you want, need and can afford with your next credit card. For example, if this is the first credit card you’re applying for, you might want to apply for a student credit card if you’re enrolled in university, consider a low rate credit card if you want to keep interest costs to a minimum or apply for a low-income credit card to ensure you meet the eligibility requirements.
If you’re a regular spender who regularly repays their balance, a frequent flyer credit card might reward you for your spending. If you have some big ticket items in mind but want to keep your interest costs low, a 0% purchase rate credit card could come in handy. Otherwise, if you’re struggling to repay an existing debt, a balance transfer credit card with a 0% promotional offer could help you get your finances under control.
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.
What do I need to compare?
- Interest rates on purchases, cash advances and balance transfers
- Annual fees
- Interest-free periods
- Rewards programmes including 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.
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 record. The eligibility requirements usually include:
Credit card eligibility requirements
- Age. Cardholders must be at least 18 years of age.
- Minimum income. Some credit card providers may only insist that you have an income, while others will specify a minimum annual figure.
- Residential status. Credit card issuers usually require you to be a permanent UK resident.
- Good credit history. You’ll normally need to have a good credit history with no defaults or evidence of bankruptcy 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, but also to you at any time. You can request a free copy of your credit history before applying, so you can 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: 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 credit utilisation ratio is an indication of poor credit-worthiness and reduces the likelihood of a successful application. To calculate your ratio, divide the total current balances on your cards by their total limits.
How to lower your utilisation ratioFor 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 #7: Bank with your credit card provider-to-be
Opening a savings account or debit account with the bank you’re applying to could help with the application process. Firstly, it will significantly speed up your application, because you’re an existing customer and the bank has already verified that you are legitimate. Secondly, if you have a current 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 will usually already be pre-populated on the forms. As long as they meet the eligibility requirements, existing customers can sometimes get approved quicker than other applicants without the hassle of providing further documentation.
What to remember during the credit card application process
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: Be careful with the details
You’ll be asked to provide a lot of information during your credit card application, like addresses, contact numbers, employment details, 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.
List of documents needed for credit card application
Tip #9: Organise the required documents
As well as eligibility requirements, you’ll be required to provide documents (or copies of documents) supporting your application. Supporting documents you’ll typically be asked for include your driver’s licence, proof of residential status, recent payslips or a tax return. Make sure you confirm what you need to provide before you start 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 benefit payments), make sure to include these details. Fabricating or inflating your income, on the other hand, is considered fraud.
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 enquiry that a lender makes about your credit history leaves a new mark on your credit file. If you apply for many cards in a short period, it would appear to every subsequent lender that you have a lot of debt, even if that weren’t true. This could leave you in a vicious cycle of applying for credit cards and not having them approved. Some banks may even automatically reject your application if you’ve recently applied for a credit card.
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.
Applying for a credit card is a relatively simple process and can take as little as 15 minutes. If you do your research beforehand, ensure you meet the eligibility requirements and prepare the necessary documents, you’ll likely increase your chances of approval. When you’re finished, you’ll usually get an instant decision. If it’s good news, look carefully at what deal the card issuer has offered you (it’ll be tailored to your individual circumstances).
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