How To Increase Your Chances Of Credit Card Approval
Whether you’re asking someone out on a date, requesting a raise or applying for a new credit card, no one likes to be rejected. Yet rejection is something that nearly 21% of credit card applicants experienced in 2021 according to the Federal Reserve.
On a brighter note (at least where credit cards are concerned), certain actions could put you in a better position to qualify for the new account you wish to open. So, before you fill out your next credit card application, you may want to take a moment to familiarize yourself with the suggestions below. Here are five tips that could help you increase your chances of a credit card approval.
1. Find Out Where You Stand
When you apply for new financing—credit cards or otherwise—the lender is almost certain to review your credit report and credit score as part of the application process. That makes it critical to understand the current condition of your credit information before you apply for a new account.
With certain loans, like mortgages, the lender will typically review your credit reports from all three major credit bureaus (Equifax, TransUnion, and Experian), along with the associated credit scores. Credit card applications, however, typically (but not always) involve the review of a single credit report and associated credit score, not all three.
Of course, you may not know which credit report and score a credit card issuer intends to check with your new account application. As a result, it’s wise to check all three of your credit reports (and possibly your credit scores too) before you apply for credit cards or other forms of financing.
A pre-application credit review could provide you with valuable information, including:
- The condition of your credit reports and credit scores (e.g., bad credit, fair credit, good credit, excellent credit, etc.)
- Whether any errors exist on your credit reports that you need to dispute
- Knowledge about any issues that may be holding your credit score back
2. Take Action (If Needed)
Once you have copies of your three credit reports, you can use the information to your advantage. You already know that a credit card issuer will review one of your reports and scores when you apply for a new account. Therefore, it makes sense to try to put yourself in the best light possible first.
Tips on How To Improve Your Credit Score
Every situation is different. Yet depending on the information you discover on your credit report, one or more of the following actions might benefit your credit score.
Let’s say you discover that your credit score isn’t as high as you wish. You can search your credit report for clues to find out why your credit score isn’t higher. From there, you may be able to create a customized plan to try to build (or rebuild) a better credit score for the future.
- Dispute Credit Errors: A Federal Trade Commission study found that one in four consumers identified credit report errors that might have an impact on their credit scores. If this unfortunate situation ever happens to you, the Fair Credit Reporting Act (FCRA) empowers you to dispute the error with the appropriate credit bureau.
- Pay Down Credit Card Balances: This wise move has the potential to lower your credit utilization rate, improve your credit score, and save you money.
- Avoid Late Payments: Paying your credit obligations on time is critical if you want to protect your credit score from damage. Late payments can stay on your credit report for up to seven years. Yet the impact they have on your credit score will lessen over time. (Recent late payments are the most serious from a credit score perspective.)
- Consider Being An Authorized User: If a loved one adds you onto an existing, well-managed credit card account, being an authorized user might help you build positive credit.
- Establish New Credit: If you have a thin credit file or lack certain types of accounts on your credit report, adding new accounts to the mix might benefit you. A credit builder loan or a secured credit card could be worth considering if you have little credit history or damaged credit history that you’re trying to overcome.
3. Find the Right Fit
There are many details that matter when you’re searching for the right credit card to open. Finding a rewards credit card that fits your spending style is, of course, an important consideration. At the same time, you want to make sure you don’t overlook the need to find credit cards that are a match for your credit score range.
If you’re hoping to open a premium rewards credit card, for example, and you only have a fair credit score at present, it’s unlikely you’ll qualify for your desired card. On the other hand, you may be able to open some form of rewards credit card even with a fair credit score.
You can always work to improve your credit and upgrade the credit cards in your wallet in the future. In the meantime, finding a credit card that’s a good fit for you now could help you earn some rewards. Plus, if you manage your credit card responsibly, it might help you improve your credit score as an added bonus.
4. Understand What Counts As Income
In addition to your credit score and credit history, a card issuer will also consider details about the income you earn when you apply for a new account. Good credit shows the card issuer that you’re more likely to pay your credit obligations as agreed. Solid income figures can show a card issuer that you have the financial capacity to make payments.
Showing more income on a credit card application could increase your chances of qualifying for a new account, especially if you owe balances on other debts. Yet many people don’t realize that they may be able to list more than their own personal income on a credit card application.
With credit cards, federal law allows you to include household income when you apply for a new account. An amendment to the Credit Card Accountability Responsibility and Disclosure Act (CARD Act) made this change to protect full-time parents and non-working partners and help them qualify for credit cards. Regardless of your marital status, you can include household income on your credit card application as long as you have a “reasonable expectation of access” to the funds. You may also be able to include income from other sources such as child support, disability benefits, alimony, investment income and more.
5. Ask For Reconsideration
A credit card denial can be disappointing, but it isn’t necessarily the final word. Most credit card issuers have something known as a reconsideration line that might help you in this situation.
A reconsideration line is a phone number you can call to request more information and to plead your case if you receive a denial on your initial credit card application. You can look up the appropriate phone number for the various credit card companies here.
When you reach someone from a credit card company’s reconsideration department, first find out why they turned down your application for new credit. Aside from obvious causes for a credit card denial, other reasons a credit card issuer might turn down your application include:
- You have a credit freeze in place and the card issuer can’t access your credit report.
- You’ve already received a welcome offer from the card issuer in the past and aren’t eligible for another one (or, at least, you’re not eligible for a new bonus yet).
- The card issuer isn’t comfortable extending more credit to you due to the other accounts you already have open with the same institution.
- There are too many recent credit card inquiries on your credit report.
- You’ve opened too many new credit cards recently (i.e., the Chase 5/24 rule).
Once you find out why a credit card company denied you, you may be able to share evidence that could change the company’s mind. For example, if you’re willing to lower your existing credit limits on other accounts with the same issuer, the company might be willing to open a new account for you. Or if the company simply couldn’t access your credit report due to a credit freeze, you can lift the freeze and ask the card issuer to try to check your credit again.
Most of all, be polite. A credit card company is not obligated to reconsider your application. Kindness can go a long way toward convincing someone to take another look at your situation.
Getting a new credit card can be exciting, especially if the account comes with the opportunity to help you build credit or earn valuable rewards. When you make a point to prepare in advance, it could stack the deck in your favor and make you more likely to receive a credit card approval rather than a denial.