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What do lenders look for when choosing to approve your credit card application?

A lender considers more factors than just your credit score.

Lenders want to know if you’re able to repay your debt. That’s why they need your personal and financial information, including annual income, employment status, Social Security number and your credit score. Based on the information they receive, the lender will decide whether to approve your credit card application and what your interest rate will be.

Two main questions lenders ask

  1. Are you likely to repay the credit?
    You may have a great income and lots of money to repay the loan, but if your credit history suggests you renege on your debts or pay them late, then very few lenders will look favorably upon you unless they’re able to secure their loan against a security deposit.
  2. Are you able to repay the credit?
    Lenders need to see that you have a regular income so your repayments can be easily covered. If you don’t have a regular income, some lenders may deny your application, even if you have a good credit score.

Does credit repayment need to be guaranteed?

Not unless you’re applying for a business credit card. Personal credit cards usually don’t require a guarantee if you have a good credit score or higher. If your credit score is lower than that, a bank may require a secured deposit, which will act as your credit line.

How will a lender make sure I repay the debt?

Lenders believe that you will repay your debt. If you make a late payment, you’ll pay fees and interest. If you can’t repay your debt, your account will go to a collection agency. Lenders will always make sure they get what you owe.

Compare credit cards

Name Product Filter values Rewards Purchase APR Annual fee
Blue Cash Everyday® Card from American Express
3% at US supermarkets on up to $6,000 per year (then 1%), 2% at US gas stations and select US department stores and 1% on all other purchases (redeem as statement credit)
0% intro for the first 15 months (then 13.99% to 23.99% variable)
$0
Earn up to $250. You'll get 20% back on Amazon.com purchases in the first six months for up to $150 back, and $100 after you spend $2,000 in the first six months. This is a higher-than-average welcome offer for a card with no annual fee. Terms apply, see rates & fees
Blue Cash Preferred® Card from American Express
6% on select US streaming services, 3% on transit and US gas stations, 6% at US supermarkets on up to $6,000 annually, then 1% after that and on all other purchases (redeem as statement credit)
0% intro for the first 12 months (then 13.99% to 23.99% variable)
$0 intro annual fee for the first year ($95 thereafter)
Earn up to $350. In your first 6 months, you can earn a $150 statement credit when you spend $3,000, and earn 20% back on Amazon purchases made with your card, up to $200 total. Having 6 months to earn a welcome offer is a rare benefit as most cards give you only 3. Terms apply, see rates & fees
TD Double Up℠ Credit Card
Up to 2% cash back. 1% cash back on purchases plus 1% when you redeem into an eligible TD Bank Deposit Account
14.99%, 19.99% or 24.99% variable
$0
Earn up to 2% cash back. 1% cash back on purchases plus 1% when you redeem into an eligible TD Bank Deposit Account. Available in: CT, DC, DE, FL, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT
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Compare up to 4 providers

Bottom line

Lenders look at many factors when you apply for a credit card, but all they want to know is whether or not can you repay a debt. To get approved for most credit cards, you need a good credit history and a steady annual income.

If you’re looking for the right card to fit your financial needs, compare your credit card options.

Image: Shutterstock

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