Nobody likes rejection, especially when it comes from a credit lender. If you’re thinking of applying for a credit card, here are 10 tips to increase your chances of getting your application approved.
1. Don’t apply for too many cards at once
Every time you apply for a credit card, it dings your credit score, so if you apply for many cards at once, it doesn’t look good to lenders. It’s better to take your time to find the right card to apply for than to put your eggs in too many baskets. It’s also best to spread out your requests at least six months apart.
2. Know what’s in your credit reports
Stay on top of your credit history to troubleshoot errors. When you apply for a card, any errors that haven’t been corrected could impede your approval. You can inquire once a year at each of the three major credit-reporting bureaus — Experian, Equifax and TransUnion — to find out your credit history. You can also obtain your credit reports once a year at annualcreditreport.com. If you spot an error, file a dispute with the credit-reporting company..
3. Apply for cards that fit your credit score
If you have fair credit, for example, applying for credit cards that are best for people with excellent credit will almost surely guarantee a rejection. It’s better to apply for cards that match your current score and build it from there. You can find out your credit score by paying a small fee when you look into your credit history.
4. Pay your bills on time
You need to pay all bills on time to show that you have a good track record. This means staying on top of payments for credit cards, student loans, mortgage, rent, utilities and everything in between.
5. Watch your debt-to-limit ratio
Lenders look at the debt-to-limit ratio, or credit utilization, on your other credit cards. You’ll want to maintain a ratio of 30% debt to 70% available credit. So if you have a card with a credit limit of $1,000, try not to exceed $300 in total charges.
6. Create a diverse range of credit
Having a mix of credit history — a few different kinds of cards and loans — will help your appeal as a borrower. When you consistently make timely payments across the board, it shows you can handle different kinds of credit, and you’re more likely to be deemed a reliable applicant.
7. Try a secured card to build credit history
Without a credit card, you’ll probably need to find a secured credit card to build a credit history. With a secured card you’ll be asked to put down a cash deposit and your credit line will be equal to that amount. After you make on-time payments over six months to a year, you’ll have a better chance of being approved for an unsecured, or traditional, credit card.
8. Find a co-signer
If you have no credit or bad credit, getting a co-signer will increase your likelihood of being approved. This means that someone else will be responsible for your debt if you can’t make the payments. Be sure to find someone with good credit.
9. Build credit early
Applicants with a lengthier credit history have a better chance of being approved. Start building credit early, and be careful when you close other cards, especially if you’ve had them for a long time. Your credit score will be higher if you have several open accounts in good standing.
10. Apply at your bank or credit union
You’ll be in a better position to win approval if you apply for a credit card at the bank or credit union where you have a checking or savings account.