Applying for a credit card is easy, but getting approved is a another story. Why? Well, credit card issuers want to be certain that you’re a good fit for their product. If anything in your application indicates otherwise, you can expect a rejection. But there are some things you can to do increase your chances of being approved.
Assess your credit health
Like it or not, creditworthiness is a major component of the approval equation. If your score is too low, you may not qualify for that cash back or rewards credit card. Even worse, creditors may not be willing to take a risk on you. And if they do, you may receive an exorbitant annual percentage rate (APR). So, you want to assess your credit health before moving forward.
Check your credit score
The are several variations of your credit score. Yet, the FICO score, which ranges from 300 to 850, is the most prevalent model. The FICO score is comprised of the following components:
- Payment history (35%)
- Amounts owed (30%)
- Length of credit history (15%)
- Credit mix (10%)
- New credit (10%)
Quick note: the credit card issuer may see a different number if they use a variation of the FICO model. You can use a service like CreditSesame to get your credit score.
Retrieve your free credit report
Visit AnnualCreditReport.com to get a copy of your credit report. (You’re entitled to one free copy from Equifax, Experian and TransUnion each year). Review the report since the contents determine your credit score. If you notice inaccuracies, file a dispute.
Improve your credit rating
Remember, the goal is to boost your credit score to increase approval odds. A few ways to do so:
Make timely payments
A whopping 35 percent of your credit score is derived from payment history. So, if you make late payments, your score will suffer until you break the cycle. A better option: get current on all your accounts and continue this pattern to keep negative marks off your credit report. In the event you can’t pay on time, notify the creditor immediately and request a payment arrangement.
Reduce your debt load
The second largest factor of your FICO score is the amounts owed to creditors. Creditors like to see your debt utilization ratio at 30% or lower. So, if your credit line is $1,000, your outstanding balance shouldn’t exceed $300. To reach the optimal debt utilization ratio, minimize expenses and use the funds to pay down your debts faster.
Refrain from opening too many new accounts
Each credit card application generates a hard inquiry. This can ding your credit score by up to five points, notes myFICO. So, only apply for new credit as needed.
Finding a credit card that suits your needs shouldn’t pose too much of a hassle. Determining if you qualify is another issue. To get an idea of what’s out there, start with SuperMoney’s credit card comparison tool.
Some credit card issuers offer pre-screening tools on their website. These are soft inquiries that will not impact your credit rating. You can also call the credit card issuer to inquire about qualification criteria.
Understand the approval process
Once you’ve selected a credit card, complete the application in it’s entirety. In most instances, you’ll need to provide your full name, address, date of birth, Social Security number, employer and annual or monthly income. Refrain from falsifying information or you could face jail time or incur hefty fines.
Instant approval credit cards
Instant approval credit cards afford you the luxury of receiving a response in minutes. Otherwise, you’ll receive a decision via snail mail within 7 to 10 business days.
How to deal with a rejection notice
If you receive a rejection notice, don’t throw in the towel just yet. Review the letter to determine why your application wasn’t approved. A few options to consider:
- Appeal the creditor’s decision. Contact the creditor at the number provided on the rejection notice to plead your case. They may reverse the decision on the spot, but be prepared to submit a written appeal if requested.
- Consider credit cards with less stringent qualification criteria. There may be options on your list with lower barriers to entry. Call the credit card issuer(s) to inquire about the minimum qualification criteria before applying.
- Apply for a secured credit card. Peruse SuperMoney’s list of secured credit card options to find a secured credit card that best suits your needs.
The bottom line
Creditworthiness can make or break your approval chances. So, it may be best to give the credit card applications a rest and work on rebuilding your credit score.