Credit cards are a convenient way for making payments for purchases and managing expenses. They offer the flexibility to pay at a later date and the potential to earn rewards. However, getting Online Credit Card Approval can be challenging, especially if you have a limited credit history or a low credit score.
To improve your chances of approval for a credit card, ensure the following:
1. Check and Analyse Your Credit Score
Checking your credit score and assessing your credit report is an essential step in order to apply for a credit card. The credit report gives an overall summary of your credit history and behavior. It includes your credit accounts, payment records, running loans, delay records, and defaults (if any). Your credit score is determined as a quantified value of your creditworthiness based on your credit report. Any score above 700 is considered good by most banks.
Assess your credit report to look for any mistakes or discrepancies, and challenge any false information. Address any negative items on your credit report by making payments or setting up payment plans with creditors. Your chances of getting credit card approval increase with a good credit score.
2. Choose the Right Card
Different credit cards have varied approval requirements. Some cards are designed for people with excellent credit, while others are more lenient for those with fair or low credit. Before making an application for a credit card, research the requirements and qualifications for the card you want. Look for cards that fit your credit profile and have features that align with your spending habits and goals.
For example, if you have a limited credit history or a low credit score, look for secured credit cards or cards designed for people with no credit or lower credit. If you travel frequently, look for cards that offer travel rewards and perks, such as access to airport lounges or travel insurance. If you have high expenses in specific categories like gas, groceries, or restaurants, look for cards that offer cashback or rewards points.
3. Check the Credit Card Interest Rates
When selecting a credit card, it’s imperative to carefully read and compare the interest rate charged by different issuers. It can help you select an affordable card that will not put you in more debt in case you are not able to make a bill payment on time. The interest rate charged by a credit card is influenced by factors such as your payment history.
4. Understand the Application Process
The credit card application process can vary depending on its issuer and the card. However, most applications require you to provide personal information, employment and income details, and other details. Ensure to complete the application is accurate.
In addition, some applications may require a security deposit or income verification. You may also be required to authorize a credit check. It temporarily lowers your credit score. Multiple credit inquiries within a short period can also lower your credit score, so you must limit the number of applications you submit.
5. Build a Relationship with the Issuer
If you already have a banking relationship with a particular institution, consider applying for a credit card from the same issuer. Issuers may be more willing to extend credit to existing customers, especially if you have a positive history with them.
You can also consider starting with a co-branded card from a retailer or company you visit frequently. These cards may be easier to obtain and help you establish a credit history with the issuer.
6. Reduce Your Debt and Improve Your Debt-to-Income Ratio (DTI)
High debt or a high DTI ratio can negatively impact your creditworthiness and reduce your chances of getting approved for a credit card. To increase your chances, you must pay off or reduce your debt and improve your DTI ratio. You can do this by increasing your income and/or minimizing your expenses. It can help demonstrate to the issuer that you are financially responsible and can manage your debts effectively.
7. Apply for a Secured Credit Card
If you have a limited credit history or a low credit score, you could think about applying for a secured credit card. A security deposit is mandatory for this kind of card, which acts as collateral for the credit limit. The deposit amount and credit limit are generally the same. Due to their ability to generate a good credit history and their ability to report to lending institutions, secured credit cards are unquestionably a fantastic alternative for building a good credit history.
8. Maintain a Good Credit Utilisation Ratio
If you have an existing credit card and are planning to go for another one, the credit utilization ratio is an essential aspect when evaluating your creditworthiness. It is the total credit you use compared to that of the available credit limit.
A high credit utilization ratio can lower your credit score and lessen your chances of being approved for a credit card. To maintain a good credit utilization ratio, keep your credit card balances low and make bill payments on time. Ideally, your credit utilization ratio should always be less than 30% to show that you are responsible for your credit.
Conclusion
Getting Online Credit Card Approval can be tough, but it is achievable with the right strategies. By checking your credit report, choosing the right card, understanding the application process, and reducing your debt, you can start building your credit and achieving your financial goals via a credit card.
