Getting a credit card in 2021 can be challenging. According to a report by The Motley Fool, credit card issuers are being cautious. This means that they’re tightening their approval requirements, resulting in fewer approvals. They understand that the economy is going to take a while to bounce back – even with the potential end to the global coronavirus pandemic is in sight.
Don’t give up hope, though. Even if card issuers are now stricter with processing credit card applications, they still approve applications under the right circumstances. If you’re going to apply for a new credit card this year, you’ll need to take every possible step to bump up your chances of securing approval.
Here are six suggestions you should keep in mind to boost the odds of credit card approval:
Make a habit of checking all of your credit reports from major credit reporting agencies – Experian, Equifax and Transunion. If you are planning to get a credit card (or even buy your dream home in the future), you’ll need to go beyond simply glancing at the reports.
Credit reporting agencies follow a credit scoring system to determine your score. This information has a big influence on your ability to secure new financing. It’s also the basis for your credit card’s terms, including the credit limit and interest rate.
When looking at the credit reports, you need to check if the information provided is accurate. No one else will do this for you unless you hire a credit repair service provider to help you look for errors.
Monitoring your credit score periodically is also a good idea. Take note, though, that there are several dozen possibilities when checking this score. Many lenders currently use some credit score variation from either VantageScore or FICO brands. What’s true for both scoring platforms is the higher your score, the higher your chances of securing a credit card.
Inaccurate reports can contribute to denied credit card applications and lower scores. Although lenders and credit bureaus do their best to maintain accurate credit reports, mistakes sometimes occur.
You, therefore, need to bring up any credit report error you find to the credit reporting agency. The Fair Credit Reporting Act (FCRA) requires credit bureaus to verify and investigate that the accuracy of your credit reports. They, however, are only required to conduct these investigations when you tell them to do so.
If you do come across errors on your credit report, you’re the one who needs to take action. This involves submitting a dispute to each credit bureau reporting the allegedly inaccurate data. The bureaus will then have 30 to 45 days to investigate your claim and amend or delete errors they identify.
Credit card issuers are interested to know your employment situation when getting a credit card. They want to see your ability to repay the balances charged to your account.
You may encounter difficulty getting a credit card or line of credit if you’re laid off from your job. You’ll have a higher chance of approval, however, if you have maintained employment throughout the financial crisis caused by the pandemic.
Given this, remember to list your household income, and not just your personal income, on your credit card application. This is a rule you’ll find in the Consumer Financial Protection Bureau (CFPB). Look at this as a godsend if you lose your job but your partner is still earning an income or employed.
This no-brainer advice is sometimes overlooked by credit card applicants. Paying your monthly utilities, rent, mortgage, car loan and mobile phone plan on or before the stipulated due date helps keep your credit score in check. Just make sure that these on-time payments show up on your credit report.
A premium credit card named after an expensive metal can be appealing. If your credit standing doesn’t meet the requirements of the card issuer for this type of plastic, you should avoid applying.
Card issuers generally list the eligibility requirements for their different credit card products. You should take note of this information and apply for products that match your credit score. Otherwise, you’ll likely face an application rejection, which is never a pleasant experience.
This type of credit card helps people build credit. This involves putting down a certain amount of money upfront. Once approved, you can spend up to that amount on the credit card. A secured credit card is ideal for people with less-than-stellar credit scores.
Don’t leave your credit card applications to chance. Follow these six tips to bump up your likelihood of approval.
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