How to Increase Your Chances of Credit Card Approval – Forbes Advisor

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Whether you’re asking someone out, asking for a raise, or asking for a new credit card, no one likes being rejected. Still, rejection is something nearly 21% of credit card applicants experienced in 2021 according to the Federal Reserve.

On a more positive note (at least when it comes to credit cards), certain actions could put you in a better position to qualify for the new account you want to open. So before you complete your next credit card application, you might want to take a moment to familiarize yourself with the suggestions below. Here are five tips that might help increase your chances of getting credit card approval.

Find the best credit cards for 2022

No credit card is the best option for every family, every purchase or every budget. We have selected the best credit cards so as to be the most useful for the greatest number of readers.

1. Find out where you stand

When you apply for new financing, credit card or otherwise, the lender is almost certain to review your credit report and credit score as part of the application process. It is therefore essential to understand the current status of your credit information before applying for a new account.

With some loans, like mortgages, the lender will typically review your credit reports from the three major credit bureaus (Equifax, TransUnion, and Experian), along with the associated credit scores. Credit card applications, however, usually (but not always) involve reviewing only one credit report and associated credit score, not all three.

Of course, you may not know what credit report and score a credit card issuer intends to check with your new account application. Therefore, it’s wise to check your three credit reports (and possibly your credit scores as well) before applying for a credit card or other forms of financing.

A pre-application credit check could provide you with valuable information, including:

  • The status of your credit reports and credit scores (eg, bad credit, fair credit, good credit, excellent credit, etc.)
  • If there are errors in your credit reports that you need to dispute
  • Awareness of any issues that may delay your credit score

2. Take action (if necessary)

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 possible light first.

Tips to improve your credit score

Every situation is different. Yet, depending on the information you uncover on your credit report, one or more of the following actions could benefit your credit score.

Let’s say you discover that your credit score isn’t as high as you want it to be. You can check your credit report for clues as to why your credit score is not higher. From there, you may be able to create a personalized plan to try to build (or rebuild) a better credit score for the future.

  • Disputed credit errors: A Federal Trade Commission study found that one in four consumers have identified credit report errors that could impact their credit scores. If this unfortunate situation happens to you, the Fair Credit Reporting Act (FCRA) allows you to dispute the error with the appropriate credit bureau.
  • Pay off credit card balances: This smart 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 essential if you want to protect your credit score from harm. Late payments can stay on your credit report for up to seven years. Yet the impact they have on your credit score will diminish 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 to an existing, well-managed credit card account, being an authorized user can help you build positive credit.
  • Establish new credit: If you have a thin credit history or if certain types of accounts are missing from your credit report, adding new accounts to the mix could benefit you. A credit builder loan or secured credit card might be worth considering if you have a poor credit history or a damaged credit history that you are trying to overcome.

3. Find the right person

Many details matter when looking 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 that you don’t overlook the need to find credit cards that match your credit score range.

If you’re hoping to open a premium credit card, for example, and currently only have a fair credit rating, you’re unlikely to qualify for the desired card. On the other hand, you may be able to open some form of rewards credit card, even with a fair credit rating.

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 right for you now could help you earn rewards. Plus, if you handle your credit card responsibly, it could help improve your credit score as a bonus.

4. Understand what counts as income

In addition to your credit score and credit history, a card issuer will also consider details of the income you earn when you apply for a new account. Good credit shows the card issuer that you are more likely to pay your credit obligations as agreed. Strong revenue numbers 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 applying for a new account. An amendment to the Credit Card Accountability and Disclosure Act (CARD Act) made this change to protect full-time parents and out-of-work partners and help them qualify for credit cards. Regardless of your marital status, you can include household income in 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, etc.

5. Ask for a reconsideration

A credit card decline can be disappointing, but it’s not necessarily the last word. Most credit card issuers have something called 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 argue your case if you receive a denial on your initial credit card application. You can find the appropriate phone number for different credit card companies here.

When you reach someone from a credit card company’s reconsideration department, first find out why they declined your request for new credit. Besides the obvious causes for a credit card denial, other reasons a credit card issuer might deny your request include:

  • You have a credit freeze in place and the card issuer cannot access your credit report.
  • You have already received a welcome offer from the card issuer in the past and you are not eligible for another one (or, at least, you are not yet eligible for a new bonus).
  • The card issuer is not comfortable extending more credit to you because of other accounts you already have with the same institution.
  • There are too many recent credit card applications on your credit report.
  • You opened too many new credit cards recently (i.e. the Chase 5/24 rule).

Once you find out why a credit card company declined you, you might be able to share some 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 checking your credit again. .

Above all, be polite. A credit card company is not obligated to reconsider your request. Kindness can go a long way in convincing someone to reconsider your situation.

Find the best credit cards for 2022

No credit card is the best option for every family, every purchase or every budget. We have selected the best credit cards so as to be the most useful for the greatest number of readers.

Conclusion

Getting a new credit card can be exciting, especially if the account offers the ability to help you build credit or earn valuable rewards. When you prepare ahead of time, it could stack the deck in your favor and make you more likely to receive a credit card approval rather than a denial.

About Joan Ferguson

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