Since ancient times the currency for trading has taken many forms, and it is still under variation as new advents and advancements are taking place for the mutual convenience of buyers and payers. A credit card is one of the most prevalent forms of financial tools of our times as the credit industry in the United States is still moving fast with positive signs of growth.
In olden times, lending, credit with interest was religiously formidable due to a sole reason that many people were very reluctant to manage their debt, soon the debt went bad, resulting in a financial crisis in families leading to severe poverty and adding to financial hardship and misery for those people and their families.
The modern understanding and research in this business have resulted in measures and practices that tend to economically and financially isolate and protect the individuals and firms that are good at paying off their debt in time from the people who are not good at doing so. It protects the rights of individuals who are better debt payers and giving new chances to others who are not good at it, to learn and improve their habits of laying of debt. A complete system came into existence for the measurement and record keeping for those who apply for the luxury of credit cards. It is a system that is beneficial for all the partaking parties. It creates an environment of a win-win situation for everyone.
Unless you have no credit history in which case specialized credit cards are an option better known as “Secured Credit Cards,” you need the following measures and tips to improve your odds and increase your chances to obtain a credit card upon application. (Find out the best credit card for you to apply for in 2017—You have nothing to lose, its completely free – Free call and free consultation).
Research Before Your Credit Card Application
There are a huge variety of credit cards available for a host of individuals that have different requirements and backgrounds. So, it is a good idea to do some research and get familiar with the options and opportunities available for your particular requirements and needs. In this process, also keep an eye on your credit report from major credit bureaus, making sure there are no errors before you apply. You can get a free credit copy of these reports online for a 12 month duration.
Never Apply for Multiple Credit Cards at the Same Time
It is crucial to know that every time you request a credit card, it will affect your credit score that will not look good to lenders and decrease your chances of getting approved. It is better to spend some time to research for credit cards that suit you the best instead of abruptly applying for too many cards at the same time. If you intend to obtain and manage your credit from multiple cards, then each of your credit card applications should have at least six months of gap between each credit card application.
Don’t Apply for Every Offer that Fancy You
It is crucial that you keep an eye on your credit history, if it is not impressive, deal with flashy marketing gimmicks of credit card companies with care. You may see an offer with a hefty sign-up bonus or an attractive reward structure and other fancy advertising stuff. Be careful, because each credit card application ends up on your credit report and rejection of your application can drastically spoil your credit history. Therefore, before the application, be knowledgeable about your standing on your credit score. Call us now for a free consultation or schedule a free call.
Keep Your Debt Under Control
When a credit card company checks your credit history, they do it for a reason. They need to find out how serious you are about managing your debt. It is strongly advisable that you reduce the amount of money you owe to the lenders on your records. According to an estimate that you should have no more than 30% of your credit score regarding debt. In technical terms, your “credit utilization ratio” (“Total Balance” divided by “Total Credit Limit” times 100) should be less than 30%. For instance, if you have a credit card with a limit of $1000 keep your spending under $300, otherwise your chances to get rejected for a credit card application will increase. Of course, an ideal credit utilization ratio is 0%.
Apply for Credit Cards that Fits in Your Credit Score
Credit lending companies use your FICO score (stands for Fair, Isaac, and Co.) to make a decision to offer you a credit card, FICO score is the most popular form of credit scoring, so popular that you can think of it as a synonym to credit score. So, it is a good idea to find your FICO score before you apply for a credit card. You can see your FICO score by paying a nominal fee. When you look into your credit history, your credit card report is free once a year.
The following list shows the figures that matter to the issuer when applying for a credit card. The desirable credit score is 720 or above. Credit scores below 630 will increase the chances of rejection for your application.
- Best Credit Score: 720+
- Good credit score: 690-719
- Acceptable credit score: 630-689
- Unacceptable credit score: Below 630
Note: These numbers are tentative and may slightly vary in other publications. They are intended to give you a brief idea on this subject.
Pay Your Dues On Time
Keeping in pace with the regular, timely payments of your bills and other expenses reflects in your track record on the credit report. It includes payments from your credit card to your mortgage, rent, utility bills, etc. It shows the lender that you are a responsible person and not a forgetful, lazy monger that procrastinates his dues and gets trapped in a debt cycle.
Diversify Your Credit Types
If you are a regular borrower with a good track record than it always helps if you diversify your credit history by spending with different types of credit cards and loans. Being sure that you make payments on time, it will boost the confidence of the credit card issuer in you as a borrower. In a nutshell, a good credit history with the diversity of loans will dramatically enhance your chances to get approved.
Use Secured Credit Cards to Build Your Credit History
If you are someone new to the world of credit cards, you will find it pretty difficult to obtain a standard credit card. It is where secured credit cards come into play for you. Apply for a secured credit card which is easy to achieve even if you have a clear slate for a credit history or your credit history is very poor. Most of the applicants are usually local and students from abroad that include immigrants. You can easily improve your standing in your credit history and develop good habits to pay off loans on time with this financial instrument. Here is how secured credit card system works. It requires you to make a security deposit against the possession of the card. When you are recorded as making monthly on-time payments, you stand a better chance to get approved for regular more competitive credit cards in the future.
Get a Cosigner
If you can arrange a person with a good credit history to become your cosigner, you can get a chance to increase your odds to be approved for credit card application. Having a cosigner is a confirmation that you are trusted and not the only one responsible for your debt payments.
Prefer Bank or Credit Union that Already has Your Account
If you have a checking or savings account in a bank or a credit union, apply from there, you stand a much better chance of getting approved, but your good standing in your credit history is the key here.
Disclose Your Complete Income Details
Disclose all your income details especially if you are better off. It signifies that you are capable enough to lay off all your debts in due time. It is necessary even if you prove in your application that you have a good credit history and that you are a creditworthy individual. The issuer will still calculate your debt-to-income ratio that should ensure that you are capable of making timely payments. An increase in income or decrease in debt or both can lead to significant improvement in this ratio. Be careful and never overstate your income. Any misleading information, if caught is punishable as credit card fraud with heavy fines and prolonged imprisonment.
Don’t Apply in Peak Holiday Seasons – Plan Ahead
Holiday seasons and special occasion should be watched out for, like Christmas, New Year season and Black Friday. These are the times when the flux of people applying for credit cards dramatically increases and the credit lending companies become very choosy. If you have any news of an occasion that even hints that the credit card applications are going to shoot up, try to avoid your application during that period unless you have a near perfect credit history otherwise your chances of getting rejected will increase. If you need a credit card to go shopping on holidays, you need to be proactive and plan ahead.
Rejection for a credit card can be a double-edge sword. It hurts you psychologically and stains your credit history. It is quite important to determine that the best credit card to apply for is the one that your credit profile snugly fits with your credit history by making the best use of your time and spending. (Find out the best credit card for you for free just click here – Free call and free consultation)