Anyone can apply for a credit card, but not all applications get approved. In fact, from June to October 2016, credit card rejection rates increased from 16 percent to 31.3 percent. Getting rejected after applying for a credit card is not only a blow to the ego, it can hurt your credit score.
Follow this step-by-step guide on how to apply for a credit card to increase your chances of credit approval.
1. Check Your Credit Score
Your credit score might affect your approval for a credit card, so know what it is before you fill out a credit card application. This will save you time and also help you avoid getting an unnecessary ding on your credit report.
Credit scores range from:
- 800+: Excellent
- 740 to 799: Very good
- 670 to 739: Good
- 580 to 669: Fair
- 579 and lower: Poor
Knowing what your credit score is will help you determine which cards are the best fit for you. You can still apply for a credit card with bad credit, though you will be limited in your choices. If you’re on the border between two scores, try to improve your score before you go through the application process.
2. Improve Your Credit Score
Once you know your credit score, you can determine if you’re ready to get a credit card or if you need to improve your score first. If you need to give your credit rating a boost, focus on paying off your debts. This will lower your credit utilization rate, which can impact up to 30 percent of your credit score.
Your credit utilization rate is your total amount of debt divided by your total amount of available credit. For example, having $5,000 of debt and $10,000 in available credit puts your credit utilization rate at 50 percent, which is higher than the recommend maximum 35 percent. Paying $2,500 off in debt would move your credit utilization rate to 25 percent, which could boost your overall credit score.
3. Research Your Options
It’s important to find the best credit cards you can get with your credit score. Credit card offers can bombard your inbox or mailbox, but they’re not always the best choices for your financial needs and goals. For example, if you need a card that rewards you more for grocery spending, it wouldn’t make sense to apply for one that specializes in air miles.
Research the highest rated credit cards and find out the details on the cards in which you’re interested. It’s important to know what credit score is required for the card, the card’s APR, its annual fee and if it has a reward program.
4. Include All Your Income
A common reason people are rejected for credit cards is because they didn’t include all of their income. Income isn’t just the money you make at a full-time job — it includes money you made through a part-time position, small business or freelance project.
Also, your spouse’s income counts as yours if it’s considered accessible household income. Remember to report your gross income, not your net income. This means you should report every penny you make before taxes and deductions, not just the money you put in the bank each pay period.
5. Call the Reconsideration Line
Whether you apply for a credit card online or in person, it can take the approximately 14 days to have your application approved. However, instant approval credit cards provide you with a decision right away.
If you didn’t get approved, try calling the reconsideration line. Doing this can help you better understand why your application was rejected — and it also gives you a chance to state your case to a real person, not a computer.
Modern technology has made it easy to apply for a credit card online, but that doesn’t mean you should apply for several credit cards until you receive an approval. Applying for too many credit card accounts can hurt your FICO score, even if you don’t get approved or rack up debt. The last thing you want to do is damage your score, so be prudent about applying.