Applying for a Credit Card: Your Odds of Being Approved

Consider the following items before submitting an application for a credit card: What is the likelihood that I will be allowed to participate?

There are two reasons why the answer to that question is important. To get things started, it might be helpful to get an idea of how likely it is that you will be approved for a credit card. You may want to restrict your search for a credit card to just those for which you have a good chance of being approved and steer clear of those for which you are not qualified. Second, if you limit the number of credit card applications you make, you may be able to protect your credit score from being negatively affected. Because your credit score might potentially drop a few points due to each new credit inquiry, the fewer credit cards you apply for, the better off you will be.

However, what are the standards that must be met in order to receive a credit card? Is there anything you can do to boost your chances of approval if you are seeking to establish a credit history for the first time or if you have recently had credit problems? You will learn all there is to know about the approval process for credit cards after reading this book.

Key Takeaways

• It might take some time before you are approved for a credit card, especially if you don’t have a lengthy credit history or if your score is still recuperating from a mistake that was made in the past. When you are working to build your credit history, you should be aware that it might take some time for your efforts to be reflected in your credit score. In the meanwhile, make sure you continue to engage in positive credit behaviors (like paying your bills on time), and think about signing up for a free credit monitoring service so you can see how your score is changing over time. You also have the option of selecting one of the most effective credit monitoring programs currently available.
• It might take some time before you are approved for a credit card, especially if you don’t have a lengthy credit history or if your score is still recuperating from a mistake that was made in the past. When you are working to build your credit history, you should be aware that it might take some time for your efforts to be reflected in your credit score. In the meanwhile, make sure you continue to engage in positive credit behaviors (like paying your bills on time), and think about signing up for a free credit monitoring service so you can see how your score is changing over time. You also have the option of selecting one of the most effective credit monitoring programs currently available.
• It might take some time before you are approved for a credit card, especially if you don’t have a lengthy credit history or if your score is still recuperating from a mistake that was made in the past. When you are working to build your credit history, you should be aware that it might take some time for your efforts to be reflected in your credit score. In the meanwhile, make sure you continue to engage in positive credit behaviors (like paying your bills on time), and think about signing up for a free credit monitoring service so you can see how your score is changing over time. You also have the option of selecting one of the most effective credit monitoring programs currently available.
• It might take some time before you are approved for a credit card, especially if you don’t have a lengthy credit history or if your score is still recuperating from a mistake that was made in the past. When you are working to build your credit history, you should be aware that it might take some time for your efforts to be reflected in your credit score. In the meanwhile, make sure you continue to engage in positive credit behaviors (like paying your bills on time), and think about signing up for a free credit monitoring service so you can see how your score is changing over time. You also have the option of selecting one of the most effective credit monitoring programs currently available.

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Click Play to Learn About Credit Card Applications and Approval

Before Applying for a Credit Card, Know the Credit Score Ranges

When you apply for a credit card, the company will evaluate a number of factors, including the following:

• Your credit scores
• Income
• It might take some time before you are approved for a credit card, especially if you don’t have a lengthy credit history or if your score is still recuperating from a mistake that was made in the past. When you are working to build your credit history, you should be aware that it might take some time for your efforts to be reflected in your credit score. In the meanwhile, make sure you continue to engage in positive credit behaviors (like paying your bills on time), and think about signing up for a free credit monitoring service so you can see how your score is changing over time. You also have the option of selecting one of the most effective credit monitoring programs currently available.

Your credit score is the single most essential consideration when it comes to the availability of credit card options.

One way to determine whether or not you have a good probability of being accepted is to check your credit rating in advance. The FICO credit scores, which are used by 90% of the most prominent lenders, have a range from 300 to 850, and the average score is 650.12

Mike Pearson, an expert in finances and the founder of the website for credit rehabilitation known as Credit Takeoff, demonstrates how different credit score ranges affect a person’s chances of being accepted. “If you have a credit score of 750 or higher, you’ll be able to acquire practically any credit card on the market, even ‘prime’ cards with premium benefits and perks,” says Pearson. “This is because prime cards need a credit score of 760 or higher.” “Your credit score is not the only factor in being authorized for a card like that—you might still be denied because of an excessive credit usage ratio or a recent late payment—but if you have an exceptional credit score, you have the best chance of getting approved for most prime cards,” the author writes. “Your credit score is not the only factor in being authorized for a card like that.”

A credit score of less than 580 is regarded as “poor,” whereas a score of 580 or more is regarded as “excellent.” According to Pearson, if your credit score is in this range, your greatest chance of getting approved for a credit card is to apply for a secured credit card. Continued from the previous paragraph, Pearson states that “when you sign up for a secured credit card, you make a down payment or deposit cash into an account.” This deposit will serve as security for any future transactions.” It is possible that the credit card issuer may use your deposit to make up the difference if you do not pay your payment when it is due.

As of the month of August in 2021, the typical FICO score was 716, as stated in an annual update that was made available by FICO. This is eight points more than it was a year ago, and the company attributes the increase to the fact that lenders made adjustments for individuals whose lives were affected by the COVID-19 epidemic. 3

Your credit score will be used to establish the interest rate that you will be charged. If you have a low credit score, you should expect to pay a higher interest rate on any loans you take out.

Who’s More Likely to Be Approved for a Credit Card?

It shouldn’t come as much of a surprise that those who have excellent credit scores also have the highest chances of being approved for a credit card. In a study that was conducted in 2021 by the Consumer Financial Protection Bureau, it was shown that there is a strong correlation between credit scores and acceptance rates: 4

Credit Card Approval Rates by Score Range

Credit Score Range

Approval Rate

Superprime

84%

Prime

65%

Near-Prime

43%

Sub-Prime

19%

No Credit

16%

Borrowers with a superprime credit rating have a probability of acceptance that is four times higher than borrowers with a subprime credit rating.

There are a few conclusions that may be derived from the data shown here. Even if you have an excellent credit score, there is always a possibility that you may not be approved for a credit card, as Pearson pointed out. If you are just getting started on constructing a credit history, it is reassuring to know that it is possible to apply for a credit card even if you do not have any credit history at all.

Improve Your Odds of Being Approved for a Card

No matter how good or bad your credit is, you may improve your chances of being approved for a new credit card offer by taking certain steps. These steps can be taken regardless of your credit score.

Check Your Credit Report and Score

If you want to improve your chances of being approved for a credit card and haven’t previously done so, a good place to begin is by reviewing your credit report and ratings. If you haven’t done so before, go here. Your credit report is a collection of several pieces of information that are used to determine your credit scores. This comprises a record of past payments, current account balances, new credit inquiries, past due amounts, and data from the public domain.

You are entitled to one free copy of your credit report from each of the three main credit reporting agencies, Experian, Equifax, and TransUnion, each calendar year by requesting it via the AnnualCreditReport.com website. If you have never looked at your credit report before, ordering all three reports at the same time may assist you see how your credit history stacks up against others’. There is a possibility that you have a creditor that does not report to any of the three credit reporting agencies, which might have a negative impact on your credit score.

Make sure that all of the information in your reports is accurate by checking it over. You have the ability to register a complaint with the credit bureau that is reporting the information, giving you recourse in the event that you discover an error or inconsistency in the report.

If the bureau verifies the presence of an error, it is legally obligated to remove or rectify it, which may result in a few points being added back to your score if you bring it to their attention. 5

Practice Healthy Credit Score Habits

In the computation of a FICO score, the two aspects of a person’s financial history that carry the most weight are their payment history and their usage of credit.

Your credit utilization refers to the proportion of your available credit that you have actually used up. Learning how to exercise control over these two aspects is really necessary if you want to improve your credit score. According to Pearson, “the most essential aspect in calculating your credit score is your payment history.” [Citation needed] It’s possible for your credit score to drop by more than 50 points for something as simple as one missed or late payment.

By being prompt with your monthly payments, you may avoid getting yourself into a situation like this. If you have difficulties remembering when payments are due, setting up automated withdrawals from your bank account might be helpful. You might also set up alerts with your bank or your billers so that they let you know when a payment is coming due or when a bill is about to be paid.

If you already have one or more credit cards, maintaining low balances on those cards is one way to potentially improve your credit score. According to Pearson’s explanation, “the majority of lenders like to see a credit utilisation percentage of 30% or less.” 6

It’s possible that paying off your existing loans can help you achieve a higher utilization ratio.

There is also the possibility of requesting an increase in the credit limit on each of your cards. Your utilization ratio will improve if you don’t make any new purchases against the increased amount, but increasing your available credit limit will still help.

Compare Card Offers Carefully Before Applying

Credit card companies often alter the benefits and perks that come with their various credit card offerings. Many of them give a wide range that implies who the card is good for, even if they may not expressly say what minimum credit score they want from consumers. This is because they may not have a minimum credit score requirement.

For instance, a credit card company might offer customers with decent or fair credit a cash-back card with a single rewards rate, while reserving a card with a higher cash-reward rate or additional perks for customers with exceptional credit. In this scenario, the cash-back card would have a single rewards rate.

You may narrow down the available credit card options to those that are best suited to your credit profile by doing your homework and investigating different kinds of credit cards.

After that, you have the option of picking the playing cards that correspond most closely to your criteria in order to reduce the number of options even more. If you tend to carry a load from month to month, for instance, you may want to look for a credit card that offers a low annual percentage rate (APR) on purchases. There are credit cards that provide perks other than cash back, such as points or miles that may be used for travel.

In addition to looking at credit scores, you should be sure to assess the extra restrictions that the lender has, such as a certain minimum amount of income. Examine the card options offered by your bank in comparison to those offered by other banks. I

It is possible that you may have an easier time being authorized for a credit card if you have a history of excellent behavior with your bank or credit union.

In any case, it is important to investigate the annual percentage rate (APR) and fees associated with any card that you are contemplating purchasing so that you are aware of how much the card will cost you.

Try Other Credit-Building Options If You’re Denied

If you have trouble being approved for a credit card, you shouldn’t give up trying. To get your credit score up where you want it, you may have to put in a little bit more work.

In the meanwhile, you should look into other options for using credit, such as a secured credit card or a loan for credit-building purposes. These are unsecured, small-dollar loans that you may use to establish or build your credit history, provided that you make your payments on time.

You might look into the authorized user option if you are under the age of 21 and are unable to receive a credit card due to the CARD Act of 2009, which requires applicants to be at least 21 years old. 7 To do this, you will need to approach your parents with the request to become an authorized user on one of their credit cards.

You would not be responsible for any debts that were racked up on the card, but you would benefit from the responsible use of the card by the cardholder. This might serve as a stepping stone on the way to you eventually being approved for your own card.

The Bottom Line

It might take some time before you are approved for a credit card, especially if you don’t have a lengthy credit history or if your score is still recuperating from a mistake that was made in the past. When you are working to build your credit history, you should be aware that it might take some time for your efforts to be reflected in your credit score. In the meanwhile, make sure you continue to engage in positive credit behaviors (like paying your bills on time), and think about signing up for a free credit monitoring service so you can see how your score is changing over time. You also have the option of selecting one of the most effective credit monitoring programs currently available.

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