According to the U.S. Census Bureau, 70.2% of American households have at least one major credit card. Are you ready to add your name to this growing list?
A credit card can help you establish a solid credit history that offers plenty of perks throughout your lifetime. From securing a mortgage to applying for a car loan, it’s easier to take big steps when your creditworthiness is easy to determine.
Still, it isn’t as simple as filling out an application and walking away with some new plastic. Wondering how to get approved for credit cards? That’s why we’re here.
Today, we’re sharing the steps to take that can help you ace the application process and improve your chances of approval.
Ready to learn more? Let’s get started.
How to Get Approved for Credit Cards in Six Easy Steps
Are you simply looking to add a new credit card to your already well-maintained collection? In this case, the application process can be pretty straightforward and fast. As long as you’ve met all your payment terms and conditions, the bank can process your forms with a few clicks.
However, there are many situations that might require a little more time and effort. These include:
- Applying for a credit card for the first time
- Having a very limited credit history
- Having a bad credit score
- Having a poor credit history
When any of these issues are at hand, the bank might be hesitant to approve your application. This is because without a successful credit record in place, it can be difficult to verify that you have the resources to use a credit card responsibly.
The good news? It isn’t impossible. If you’re willing to do a little planning and brainstorming, you can improve your odds and turn them in your favor.
Let’s take a look at six steps you can take to get approved for a credit card, regardless of your past or current financial circumstances.
1. Understand Your Credit Score
Before you move forward with your application, take the time to understand your actual credit score or at get least an estimate.
You can download a free copy of your credit report once a year from any of the three main credit reporting bureaus. Read through each report and note any discrepancies or inaccuracies you see. Then, follow these steps from the Federal Trade Commission (FTC) to report them.
Applying for a credit card for the first time? If so, you might not have an actual credit score just yet, and that’s OK. You can access online credit and loan companies to see an estimate of what your credit score would be.
While it helps to know your actual number, it’s more important to know what it means. Is it high enough to help you qualify for a credit card or do you have a little work to do? While each bureau calculates your score using different measures most agree on the following credit score ranges:
- Excellent: 760 or higher
- Good: 701 to 759
- Fair: 651 to 700
- Bad: Under 650
Of course, if your credit score is high, you’re more likely to be approved for a credit card.
In fact, while the Consumer Financial Protection Bureau reports that fewer than 40% of applicants are approved for general-purpose credit cards, nearly 60% of those with prime credit scores (660 to 720) made it through. At the same time, more than 85% of applicants with excellent credit scores were approved.
While this isn’t the only factor that can sway the decision, it pays to know your credit score before doing anything else. Not loving the number you see on the screen? There are plenty of ways to improve your credit score over time, including paying down your debts and paying your bills on time.
2. Establish a Bill Payment Schedule
One of the most important considerations factored into your credit score? Whether or not you’re paying your bills on time.
In all, payment history makes up around 35% of your score.
If you’ve fallen into the habit of paying your bills late or skipping the deadline altogether, your chances of being approved for a credit card are already low. Your credit score will also reflect this inaction.
The only solution? It’s time to start paying your bills on time. Many people make the resolution to do so, but end up slipping over time.
If you have a slew of monthly payments and are having a hard time keeping up with them all, you can download and set a reminder app on your phone. Or, you can opt-in to automatic bank drafts, wherein your creditors will simply withdraw the funds from your checking account at the same time every month.
Either way, if you want to apply for a credit card, it’s imperative that you create a schedule and stick to it. Not only will this step improve your chances of being approved, but it’s also a smart way to set yourself up for long-term financial stability.
3. Start Paying Down Your Debts
While your payment history is an important part of your credit score, so, too is your credit utilization rate.
This term refers to the amount of money that you owe to your creditors in relation to your credit limits. While you’re certainly free to use a portion of your available credit, you don’t want to run up massive balances that could send you spiraling into debt. Doing so can also put a ding on your credit score.
If possible, try to keep your utilization rate below 30%. If it goes much higher than this, it sends a red flag to potential lenders that you’re spend-happy and possibly riskier to bring on board.
Are you close to maxing out all of your current cards?
Before you add one more, take the time to pay down those debts and get your credit utilization rate below 30%. This simple step alone can cause your credit score to jump substantially. Especially if you’re right on the line between fair and good credit, pay down your outstanding balances to improve your chances.
4. Don’t Jump at the First Offer
When you’re eager to get started with a credit card, it can be tempting to take the first offer you find. However, it’s in your best interest to do a little homework, first.
You want to find the card that not only provides the most favorable terms and conditions, but also caters to your individual needs. Start by thinking about the reasons why you want a credit card in the first place.
Are you most interested in the rewards that some cards can offer? In that case, check out rewards credit cards that offer airline miles, cashback perks, points, and more.
On the other hand, you might want to open an account to consolidate your debt. This means you’ll need to direct your search toward balance transfer cards designed just for that purpose. Other types of credit cards include:
- Student credit cards
- Charge cards
- Low-interest credit cards
- Subprime credit cards
- Secured credit cards
- Business credit cards
- Prepaid credit cards
You can learn more about the different types of credit cards and how each one works here.
Take your spending habits into consideration and read the fine print on each of your options. Once you find a card that looks like a good fit, most companies will simply require an online application to get the ball rolling. You’ll need to have details about your work history, income and personal information ready.
5. Include All of Your Income on the Application
Your credit score is important and will get plenty of attention during your credit card application process. Still, there’s one data point it cannot convey: your income.
A credit card company will take a look at your income to determine your debt-to-income ratio. This number helps them gauge your ability to make timely payments.
Ideally, you want this ratio to be as low as possible. At best, it will be below 20%, but anything under 30% is considered acceptable. If it sneaks over 40%, it will be considered as a sign of financial stress.
Is yours too high? There are two ways you can change the balance:
- Decrease your debts
- Increase your income
It’s important to list every source of income you have on your credit card application. This can help lower your debt-to-income ratio and make your application more appealing. That means if you have any source of side income, such as a part-time job selling jewelry online or a weekend gig with a ride-share service, list it!
Issuers want to feel confident that you have plenty of money coming in to make your monthly credit card payments. If your income isn’t up to par, they could deny your application.
Remember: As long as you’re 21 or older, you can list all of your household income when you apply. This means income from your spouse or partner can also be factored into your ratio.
While doing so can be helpful, be careful not to inaccurately inflate your income. At the end of the day, you’re the one responsible for paying your bill, so you want to make sure you’re not biting off more than you can chew. Plus, if an issuer catches you lying on your application, you could be caught and charged with credit card fraud.
Currently unemployed? You can still qualify for a credit card, but you’ll need a little help. A few of the options you can pursue include:
- Adding a co-signer to your application
- Becoming an authorized user on someone else’s credit card
- Applying for a secured credit card (requires a security deposit)
As long as you have a good credit score and some source of income you can use to pay your bills, unemployment doesn’t have to mean the end of the road for your credit card journey.
6. Stay the Course
You’ve done everything right. You worked on your credit score, paid down your debts and worked to lower your debt-to-income ratio. You even did your research and found the perfect credit card for your needs.
Yet, your application was still denied.
If this happens, you’re not without recourse. Your next step should be to call the issuer and ask for an explanation. From there, you can also request a reconsideration.
To help the conversation go as smoothly and successfully as possible, don’t just pick up the phone and call. Take the time to plan out what you’re going to say. Explain why you need the card, how you plan to use it, and the strategy you have in place to make sure you don’t miss a payment.
You have the right to know why the issuer denied your application, but remember to be polite. You won’t get very far by launching by fuming. Customer service agents are generally willing to listen to your side of the story, but it helps if you have a pleasant demeanor.
If you’re denied, don’t give up hope. In most cases, you can improve your odds of approval if you wait six months between applications.
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Once you know how to get approved for credit cards, you’re one step closer to adding one to your wallet. When you’re approved, remember to spend responsibly and always pay your bill when it’s due. Over time, this little card can boost your credit in a big way, setting you up for continued financial stability.
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