If you are thinking to apply for a new credit card, you need to carefully access the card that should apply for. Each card is different in its purpose. Travel cards, rewards cards, business cards, balance transfer cards, subprime credit cards, etc. are some of the ones that you can choose from. The bank or company that issues card review your creditworthiness before issuing one. In short, your score drives approval or disapproval of the card that you have applied for. This score gives them the idea of whether you will be able to pay your bills timely or not. Currently, the approval rate of applications is at 39.1 percent.
You should study your profile in detail before you plan to apply for the card of your choice. Some of the pointers that you should consider when applying for a credit card are:
Study credit history:
Your credit profile has information related to your financials like debt on credit cards, bank accounts, late payments, card utilization, home mortgages, etc. This information can be requested from credit reporting agencies easily. Review your credit profile in detail before applying for it. All this data is used by banks or lenders to judge your creditworthiness. This score generally lies anywhere between 300 to 850. A higher score is considered good and increases your chances of getting a credit card request approved. If you find any false information in your credit report, make sure that you file a dispute and get it corrected as it can impact your credit score negatively.
If your annual income is in a higher range or you have more assets, then you are most likely to get a card. This is due to the fact that you are capable enough to repay the credits without defaulting on them. Your annual income, financial commitments, assets, etc. are reviewed to access your capability of affording a credit card. So, pick a card with a limit amount that you can easily afford in case of unwanted scenarios. Until and unless you are financially prepared for such a liability don’t apply for one.
Choice of card:
If you choose a card that matches with your credit profile and financial bandwidth then there are higher chances of getting one approved for yourself. Hence it is very important to research different types of credit cards and understand their limits and benefits. For example, students can opt for student credit cards as they would be having a low credit score, corporates can opt for business cards, etc. In short, pick the card that fits your credit profile. A wise decision here will get you a credit card faster.
If you feel that your score is too low to get it approved for yourself, then you can start a credit building program. Such programs are offered by lenders and banks so that you can improve your credit score. With the help of this program, you can work towards clearing your overdue, improve credit history, and increase the chances of getting a new credit line. You will also learn about healthy credit score habits like paying more than the minimum card bill, becoming an authorized user, etc. This will not only boost your credit profile but also make you aware of your shortfalls while handling your finances.
Reduce your debt:
A debt in collection is doing no good to you. For improving your chance of getting a card, there shouldn’t be high debt in your credit profile. If a company like Cedars Business Services is contacting you, you should first settle those debts. These companies are here to help you and ignoring them will do no benefit. Any short-term debt can be closed easily by paying off the balance amount instantly. If there is any long-term debt in your credit profile, there shouldn’t be any installment defaults against that loan amount. Having a debt collection charge, late payments, payment defaults, etc. will reduce the credit score and hence no bank or lender will issue you a credit card.
Building credit profile takes time, hence don’t worry if you still can’t apply for a credit card yet. Understand your current financial position, work on it, and you will be holding a card in your hand within no time.