Whether asking for a raise or getting a new credit card, no one likes being rejected. Yet around 20% of credit card applicants were rejected in 2023, according to the Federal Reserve. Fret not, and take a moment to explore these simple ways to improve your chances of getting a credit card.
1. Know Where You Stand
As you apply for new financing—credit cards or otherwise—the lender is always certain to review your credit report and credit score as part of the application process. That makes it important to understand the current condition of your credit information before you apply for a new account.
Credit card applications typically (but not always) involve the review of a single credit report and associated credit score, not all three. All these factors make it wise to check all three of your credit reports (and possibly your credit scores, too) before you apply for credit cards or other forms of financing.
2. Take Action Accordingly
Once you get copies of your three credit reports, you can use the information you obtain to your advantage. You’re already aware that a credit card issuer will review one of your reports and scores when you apply for a new account. Therefore, it makes sense to try to put yourself in the best light possible first with a good credit score.
Monitoring your credit score is crucial for staying informed about your financial health and identifying discrepancies or potential issues. Regular monitoring lets you promptly detect unauthorized activity or credit report errors. Taking proactive measures based on your credit score, such as addressing inaccuracies or adjusting your financial habits, ensures a positive credit profile, contributing to improved financial opportunities and overall stability.
3. Dispute Credit Errors
A Federal Trade Commission study found that one in four consumers identified credit report errors that might have an impact on their credit scores. If this unfortunate situation ever happens to you, the Fair Credit Reporting Act (FCRA) empowers you to dispute the error with the appropriate credit bureau. Disputing credit errors is crucial for maintaining an accurate and fair credit report, as inaccuracies can significantly impact your credit score.
A higher credit score enhances your ability to secure favorable interest rates on loans and credit cards. Rectifying errors ensures that your credit report reflects your financial behavior, providing a more reliable representation to potential lenders. Proactively disputing and correcting errors safeguards your financial reputation, fostering trust among creditors and improving your overall financial standing.
4. Avoid Late Payments
Paying your credit obligations on time is critical if you want to protect your credit score from damage. Late payments can stay on your credit report for up to seven years. Yet the impact they have on your credit score will lessen over time. (Recent late payments are the most serious from a credit score perspective.)
5. Consider Being an Authorized User
If a loved one adds you to an existing, well-managed credit card account, being an authorized user might help you build positive credit. When you’re added as an authorized user to someone else’s credit card, the account’s positive payment history, credit limit, and overall responsible credit management can potentially reflect positively on your credit report.
This arrangement can help you build a positive credit history, especially if the primary cardholder has a strong credit history and consistently makes on-time payments. As an authorized user, you inherit the account’s credit history, which may include a lengthy credit account age and a record of timely payments, both of which are crucial factors in determining your credit score.
6. Establish New Credit
If you have a thin credit file or lack certain types of accounts on your credit report, adding new accounts to the mix might benefit you. A credit builder loan or a secured credit card could be worth considering if you have little credit history or a damaged credit history that you’re trying to overcome.
7. Ensure All Credit Card Payments Are on Time or Early
The most vital factor in how your credit score is calculated is your payment history. With that in mind, you should strive to make sure every payment you make is either early or on time. This rule applies to credit cards you already have, but it also applies to personal loans, mortgage or rent payments, utilities, and all other monthly bills.
Remember that a delinquency on your credit report (a payment that’s at least 30 days past due) can have a substantial effect on your credit score.
8. Pay Down the Debt You Already Have
While it may seem obvious to pay off debt fast, this is another step you could take that could help you qualify for a new credit card. That’s because the second most important factor that comprises your FICO credit score is the amount of debt you owe about your credit limits.
9. Avoid Closing Old Accounts
This is another factor that can impact your FICO score, which is the average length of your credit history. This factor is a tricky one because lines of credit you don’t use could help lengthen your credit history and improve your score, whereas closing old cards with zero balances could hurt you. To ensure your oldest lines of credit are working on your behalf, keep old credit cards and lines of credit open.
10. Maintain Your Employment
Credit card issuers would want to know your work situation when you apply for a new card, and you’ll need to be able to prove you can repay the balances you charge to your account. If you were laid off from your job, it may be difficult to get approved for a new credit card or line of credit.
Maintaining stable employment is essential for sustaining a good credit score as it reflects a consistent income stream, assuring creditors of your financial stability. A reliable job history demonstrates financial responsibility, contributing positively to your creditworthiness. Consistent employment also helps meet financial obligations, such as loan payments and credit card bills, showcasing reliability and mitigating potential credit risks.
11. Monitor Your Credit Score
The simplest way to gauge your approval odds for a new credit card is to be informed. Before applying for a credit card, it’s smart to monitor your credit score and check it for changes as you make adjustments to improve your credit score.
Most of the major credit card companies offer free access to your credit score. Note that, generally speaking, you’ll have the best chance of being approved for a new credit card with a good credit score; that is, a FICO score of 670 or higher.
12. Don’t Get Close to Your Credit Limit
Credit scoring models look at how close you are to being “maxed out,” so try to keep your balances low compared to your total credit limit. If you close some credit card accounts and put most or all of your credit card balances onto one card, it may hurt your credit score if this means that you are using a high percentage of your total credit limit. Experts advise keeping your use of credit at no more than 30 percent of your total credit limit.
A long credit history will help your score. Credit scores are based on experience over time. The more experience your credit report shows with paying your loans on time, the more information there is to determine whether you are a good credit recipient.
13. Fact-Check Your Credit Reports
If you spot suspected errors, dispute them. If you have old credit card accounts you are not using, keep an eye on them to make sure that an identity thief is not using them. Tip: If you are new to credit, consider getting a product designed to help you establish and build credit.
Financial institutions have developed various products and services, such as secured credit cards and credit builder loans, tailored to help consumers new to credit cards establish and build credit.
14. List Your Household Income
Don’t forget that you can list your household income—not just your income—on your application for a new credit card, per Consumer Financial Protection Bureau (CFPB) rules. This can be a godsend if you lose your job but your spouse is still employed and earning an income.
15. Consider Getting a Secured Credit Card
If you’re not keen about being approved for a credit card right now because your credit score isn’t in the best shape, you can also consider a secured card. This type of account requires a cash deposit as collateral, and this type of card can help you build credit when you can’t get approved otherwise.
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