Being approved for a new credit card can be exciting! But, being declined for a new credit card is absolutely frustrating. Banks and card issuers have secret approval criteria for each applicant that helps them determine whether you’re worth the lending risk. And if you’re not up to speed, denials will be on the horizon
Let’s discuss a few things that you can do to help your chances of being approved for your next credit card.
Only Apply For Credit Cards That You Can Qualify For
An easy way to avoid rejection letters is make sure that you’re applying for a card that you’re qualified to receive.
To find the right credit card for you, be sure to check your credit score first, and then see how it relates to the minimum requirements needed for card approval. If you have a limited credit history, or poor credit, then you shouldn’t bother applying for a card that’s designed for those with excellent credit. If you have a very limited credit history, then you’ll want to start with a very basic credit card that doesn’t offer rewards. If you have a poor credit history, then you might need to start with a secured card. A secured card works much like a regular, unsecured card, but it requires an upfront payment of a refundable security deposit before your account can be opened.
What credit score do you need to get approved for a credit card?
Every card issuer has specific requirements in place for each financial product they offer. Although credit cards are fairly easy to obtain, knowing the credit scoring requirements will help you choose which cards you can apply and get approved for.
A helpful resource we recommend is the Credit Pull Database. This resource will supply information related to which credit reporting agencies each creditor will pull, as well as the scores you will need to get approved. Simply enter the name of the creditor you’d like to apply for, your state, and submit. Once processed, you’ll be able to see first hand what your approval odds are for each creditor.
Pay Down as Much of Your Outstanding Balances as Possible
When a card issuer is making a decision on your credit card application, one of their most important factors they review is the likelihood of default. When they pull your credit report(s), they will be much more likely to approve your application if you don’t have large outstanding balances, high debt to income ratios, and recent late payments and delinquencies.
What many people don’t realize is that their credit report will show all of their most recent credit card statement’s balances as debt, even if they always pay their balances in full every month. To eliminate this, it is wise to pay off your outstanding balances before your credit card reporting date, which you can find on your credit card statements. When you do this, your credit report will show a zero balance on your credit cards, and credit card issuers see that as a positive sign.
Include All Eligible Income on Your Application
Credit card issuers place a lot of importance on your ability to repay, and want to see sufficient income. Unfortunately, many credit card applicants fail to include all of the sources of income that they use to qualify for a credit card. In addition to your business or employment income, you can also include investment returns, Social Security or pension income, retirement fund distributions, inheritance or trust fund payments, unemployment benefits, alimony, and child support. Also, federal regulations say you can include the income of your spouse or domestic partner, as long as you have access to those funds for repayment of your balances.
Call the Reconsideration Line
When it comes to applying for credit cards, chances are you’re going to get an automatic “pending” or “decline” response from some of the major issuers. While it might seem like a small hassle, reconsideration lines can be your best friend. If your credit card application isn’t initially approved, you can take one last step to avoid flat out rejection. Contact the credit card issuer, and ask to speak with a reconsideration specialist. Most card issuers have these representatives which can approve your application over the phone, even if their automatic system had originally rejected it. This will give you the opportunity to find out why it was denied, and plead your financial case.
Remember, credit card companies generally want people to get approved for cards, so even if you’ve have a lot of inquiries or had credit issues in the past, it is often possible to get approved.
Now that you know the steps you should take before applying for a new credit card, you should never get denied again. By taking these simple steps, you’ll be doing everything you can to avoid receiving that scary denial letter from a credit card issuer, and get on track to building a strong credit profile.