To improve your chances of being approved for a credit card, follow these tips including improving your credit score and applying intelligently.
The Top Line
- Credit cards can be extremely convenient resources for making both online and offline purchases and can offer rewards and bonuses.
- Though credit card can certainly be handy in a pinch, you should always exercise caution when using them and ensure you don’t rack up unnecessary debt.
- If you want to open a credit card, you should work on making your application as attractive as possible.
- We’ll help you become more attractive of an applicant to credit card companies, increasing your chances of successfully qualifying for a credit card.
Taking Caution When Applying to Credit Cards
If you are getting ready to open a credit card, then the chances are that you’ve heard time and again about how dangerous they can be. If you spend beyond your means, you can quickly wind up with a credit card bill that is beyond what you are able to pay each month. However, that’s not the only risk that you face when applying for credit cards.
Even if you intend on using your credit card responsibly and paying your balance in full each month, there are other ways that applying for a credit card could hurt you. When you apply for a credit card, the credit card company does what is called a “hard pull” on your account, which means that they are checking your credit score and underlying factors.
Whenever this occurs, your credit score usually goes down. This might not seem like a big deal, but it can quickly mean that you don’t have good enough credit to get the card that you want, and it can cause other issues in your life, like preventing you from being approved for a mortgage or negatively affecting your insurance rates.
So, when you are thinking of getting a credit card, you want to be sure that you proceed carefully. You want to take your time, improve your score, research your cards, and make sure that you apply for one that you can actually get. Too many hard pulls could severely damage your financial life, so we’re going to teach you how to increase your chances of getting approved for a credit card on the first try, so you don’t need to go through that.
Preliminary Steps to Take
There are several steps that you can take to improve your chances of getting approved for a credit card and make yourself a more attractive user of credit. However, we want to first make sure that we get back to the basics. There are some boxes that you should check off before you even start the process to make sure that you aren’t dooming yourself from the start.
The first requirement is that you are 21 years of age or 18 years of age with a parent’s approval. You will also need to make sure that you have a steady income, as the credit card company will want to verify that. If you don’t have a steady income, you will likely need someone who is willing to be a co-signer on the card.
Finally, you need to understand some basic concepts like “hard pull” which we have already explained, or “credit score” which is a metric designed to judge your attractiveness as a borrower.
How to Improve Your Credit Score?
Now that you know a bit more about credit cards, you are probably wanting to finally learn how you can increase your credit score and become approved for that credit card that you’ve always wanted. Don’t worry, we’ll teach you some of the most time-proven tricks for improving your credit score and what steps you can take to ensure you have healthy credit habits.
Pay Loans on Time
One of the best things that you can do if you want to improve your credit score is to pay your loans on time. Paying your loans on time and in full is not only good practice from a personal finance standpoint, but also from a credit building standpoint.
When you pay your loans on time and in full, that history will be communicated on your credit report. Credit card companies will see that you are responsible with your usage and payments and be more likely to approve your request. Additionally, your credit score will naturally increase with time when you do this.
Pay Off Any Collections
Another thing that you can do to have an almost immediate impact on your credit is to pay off any open collections that you might have. If you have an account open that is in collections status that has yet to be paid off, then you should call to pay the amount or negotiate a lower amount with the creditor. If possible, as if they offer “pay-for-delete”, which means that they will delete the collection from your credit report when paid. Many places do not offer this, but it doesn’t hurt to try!
Open collections have a very damaging effect on your credit score, so it’s very important that you prioritize them and pay them off as soon as possible.
Use Diverse Lines of Credit
Credit card companies and other lenders don’t just want to see that you have a long history of successful borrowing. They also want to see that you have experience with multiple different types of loans. This tells them that you can pay back many different types of loans and in different situations.
You should try to open up a diverse line of credit. For example, you might look at opening a credit card, auto loan, and school loan (if you can afford them, of course). This will build your credit score up and make you a more appealing borrower.
Don’t Close Old Accounts
When you pay off a credit card account, you might have the urge to close it. Who wouldn’t want to put that experience behind them once and for all? Well, not so fast. In many cases, it is not in your best interest to close the account. That’s because one of the major factors in credit score is the average age of your credit lines.
When you close a line of credit, that could decrease your average credit age. This could hurt your score and could make the difference between getting approved and rejected for your credit card. In some situations, it’s better off to leave it at a $0 balance, but keep the line open.
Apply for Cards Intelligently
Know What Kind of Credit the Bank is Looking For
Before applying for a credit card, investigate what kind of credit the bank is looking for. The description of the credit card often outlines whether the bank is aimed at customers with excellent, very good, fair, or poor credit scores. To find out what your credit score is, there are websites that offer free credit score reports such as CreditKarma. Here are some guidelines to help:
Very good 740-799
Make Use of Prequalified Offers
Some banks offer prequalified offers that allow you to see cards that may be of interest to you based on your credit. This can give you a preview of what your options may be. Since you are not applying for a card, this won’t affect your credit score.
Fill Applications Completely
As you’re completing the applications, double-check that you are filling in every blank and that every response is correct. You don’t want to be not approved for a credit card because you accidently reported your income as $7,500 instead of $75,000.