If you're new to having a credit card, you may be wondering what issuers look for on applications when it comes to credit card approval. Let's learn about what may factor into a company's decision, tips for improving your chances of approval and how to choose a credit card to apply for.
What do credit card companies check when you apply?
If you're hoping to get approved for a credit card, you may want to know what issuers are looking for when considering applications.
- Age: You must be at least 18 years old to apply for a credit card.
- Income: Issuers may want to know your income to ensure you'll be able to pay your balance and to help them set an appropriate credit limit to your account.
- Credit score: For traditional, unsecured credit cards, issuers will typically only approve applicants with a qualifying credit score. For people who haven't yet established credit, options for credit cards may be limited to secured credit cards.
When you apply for a credit card, the issuers will likely look at your income. There is a range of information you may have to provide. This includes:
- Employment: This includes your employment status, whetheryou're employed, self-employed, unemployed, retired or military.
- Total annual income: This includes your salary, investments, income from rental properties, child support, alimony and retirement income.
- Non-taxable income: This includes things like disability, socialsecurity, workers' compensation or public assistance funds.
- Housing: This includes your monthly housing costs, such as your rent or mortgage payment.
- Bank info: This includes your banking information, including your checking and savings account information.
Before applying for a credit card, you may want to know what makes up your credit score. Take a look at your credit report for the following things:
- Payment history
- Credit utilization rate
- Length of credit history
- New credit
- Credit mix
Payment history generally has the highest impact on your score, while credit mix and new credit typically have the lowest.
Tips for improving approval chances
While there are never any guarantees, there are a few things you can do to improve your approval odds.
- Find the right card: Applying for too many credit cards at once can negatively impact your credit score, so try to find one that fits you just right and only apply for that one.
- Pay your bills on time: Having a strong payment history may boost your odds of approval. Make sure you're paying your student loans, mortgage, car loan, credit card (and any other bills you might have) on time each month.
- Consider a secured card: If you need to build your credit history,you may want to look into applying for a secured card to do so.
- Find a co-signer: If you have no credit score or a poor credit score, you may want to consider a co-signer. Having someone, such as a family member or spouse, share responsibility for your debt may boost your chances of approval.
How to choose a credit card and apply
Once you feel ready to apply for a credit card, you'll need to find the right one. The “right" credit card will be different for everyone, but there are a few considerations that could help you figure it out.
- Credit score: Not every credit card is for every credit score. Many issuers will list what score you need to be considered for approval for a specific card. If you're still building your credit and have a “fair" credit score, then it may not make sense to apply for a credit card that requires an “excellent" credit score. If you're looking for ways to improve your score, tools like Chase Credit Journey® can help. You can monitor your score, see the factors that affect it, and enroll in a personalized improvement plan provided by Experian® to help take control of your credit
- Annual fee: Some cards have annual fees while others don't. Decide whether the cost will be worth it for the benefits it provides.
- Interest rate: Even if you don't intend to carry a balance on your credit card from month to month, sometimes life happens. Make sure you know what the interest rate will be if you aren't able to pay your balance in full.
- Rewards: Some credit cards offer rewards, which may include anything from cash back to travel miles. Decide if rewards are important to you, and if so, which ones make the most sense for your lifestyle.
While there's no guarantee you're going to be approved for a credit card, going into the process with knowledge about which factors will be considered and how to boost your chances may help increase your credit card approval odds.