The process of applying for new credit is always exciting. It’s not about luck. Credit card companies care about the numbers. By understanding what lenders look for, you can give yourself the best chance of being approved.
1. Checking Your Credit
Know where you stand before you start researching credit cards. Your financial history will determine which options are available to you. Even if you have a good idea about how your consumer profile looks, you should still request a free copy of your annual credit report. A number of resources are available if you’d like to get your FICO score.
2. Improving Your Credit History
If you found any negative marks on your credit report, you can fix them. Dispute information that’s incorrect. If you’ve missed payments, make a checklist that you can mark every month. Pay down your balances. Credit use accounts for a large portion of your score. It’s fine to carry a balance, but if you’re using more than 40 or 50 percent of your limits, work on lowering those debts.
3. Finding Good Offers
Before you apply, you should assess your chances of getting the card. If your credit score is above average, companies may offer you cash bonuses. You might still get approved if your score is fair to poor. You could also apply for a secured card or a product that’s intended for applicants with limited credit. According to the Federal Reserve, 20 percent of consumers don’t apply for credit because they believe that they might be denied. Even if your FICO score is average, take time to apply. Having a card in your wallet will really help during an emergency.
4. Applying For Credit
Now that you’ve found a good credit card, it’s time to apply. You’ll need to provide your name, address, Social Security number, gross income and monthly rent or mortgage payments. Be truthful, but make sure to include all verifiable income. Providing false information is a crime, and the credit card company can ask for proof. Once you submit your application, you will have to wait a few seconds for the decision. If you are approved, that’s fantastic, but don’t worry if the page says that you will hear back in a week or two.
5. Following Up About Your Application
If you aren’t approved instantly, call the card issuer to check the status of your application. Sometimes, you just need to verify your identity. Other times, the company may request proof of income or other documents. If you were denied, call the reconsideration line. This phone number will connect you to a credit analyst who can review your application and make a new decision. It’s always worth a try.
To improve your chances of getting new credit in the future, wait six to 12 months between applications. Above all, use your credit wisely.