When it comes to applying for a new credit card, what most creditors will ask from you is your overall card score. Your credit card score is basically the nature of your card when it comes to repaying loans or outstanding bills that are credited to you. If you forfeit paying your loans, your score depreciates. On the other hand, if you are good at paying back your loans, then there is a high probability that your score will be ranked among the top cards, which will be an advantage to you if plan on applying for a loan.
However, what happens if you have a poor credit score and you are in need of a new card? It is evident that most financial companies will avoid working with you when they consider your credit score. However, I have a solution for you. If you have a bad credit record, this is how you can manage to get a direct approval without breaking a sweat.
Include your Income in Your Application
Though you might have a bad credit score, it does not necessarily mean that your income is poor or you are struggling to make ends meet. Maybe your previous forfeit was as a result of a financial or personal emergency. In most cases, credit insurers will need your monthly income to calculate your overall debt-to-income ratio. This ratio helps in determining your ability to repay your loans or to make payments. If you have a formidable income, many financial institutions will find it hard to deny you a card regardless of how poor your credit history might be.
Avoid Credit Cards with Lucrative Offers
The last thing you would want to encounter is a nagging credit insurer who wants to understand why you need a new card with mouth-watering offers yet your overall score is poor. To avoid this, go after a card that offers less lucrative deals. Though this may be disappointing at the start, it’s a good starting point if you want to rectify your score and stand more chances of getting the best credit offers from different card insurers.
Apply for a Secured Credit Card
A secured card requires you to have a security deposit in your account you can begin to make any charges. This security deposit acts as your credit limit which simply means that at no given time should you have a debt below the deposited funds. The good thing about a secured card is the fact that it will report your overall payment history to credit bureaus. The more you make payments using this card, the more your credit score improves. This, in turn, gives you the opportunity to apply for an unsecured card which gives you more options.
Pay Your Outstanding Debts
Did you know that the debts you have are directly proportional to your credit score? If you are poor at paying debts, be guaranteed that your score won’t be as friendly as you may want it to be. If you want a card approval and you have an outstanding debt, make sure that you have cleared the outstanding debts or you are at least paying up the debts. Card insurers will always look at your debts to determine if you are eligible for a new card. Though you may have a poor credit score, the fact that you have been trying to pay up your debts is a positive feedback to an insurer.
Avoid Unnecessary Termination of Your Cards
If you have a bad credit score, the last thing that you should consider doing is terminating your cards. The notion behind this argument is based on the fact that card insurers will find it sinister as to why you are canceling your cards. Some may actually view this as a form of avoiding to pay up. My advice to you is, no matter how bad your card score is, don’t cancel it if you plan to get another card. Keep the cards and try to pay up the outstanding bills. This will create a trustworthy relationship between you and the insurer though it may also act as a leeway of denying you a new card.
Credit Cards Before The Digital Age
Before the advent of the digital age, getting approved for a credit card was not as quick a process as it is today. Human underwriters and public records researchers would evaluate your credit card application, credit history and financial worthiness before approving or denying credit. The internet age, instantaneous access to public records and a globally interconnected network of corporate automation can allow you to now be approved for a credit card in 60 seconds. While applying for a credit card is more convenient today, your chances of approval are not automatic. Credit card companies have application criteria, public records analyzing automation and creditworthiness standards you will have to meet before you can achieve instant credit card application approval.
Things to Consider Before Applying
You are basically asking the underwriting automation systems of a financial lending corporation to evaluate your credit card application in seconds. You should have long-standing and financially gainful employment. You should understand what a credit card is and how it should be used. You should know how using a credit card will affect your credit score and history. Know what kind of credit card you are applying for, as there are multiple kinds, to maximize your chances of approval.
How to Apply for a Credit Card
Your best chances of getting your credit card application approved in 60 seconds, or even less, improve if you apply for credit online or over the phone. You can visit the websites of banks, credit card companies, financial institutions, credit unions and businesses that offer instant approval evaluations. When you input your credit card application data via the internet or phone, you are inputting your data into automated underwriter systems. Your data will be analyzed quickly, and you should have a decision within seconds, if not under a minute. The type of information that you input on your credit card application will be publicly available information.
- Residential history
- Employment history
- Financial history
- Bankruptcy and debt history
- Student debt history
Have you lived at the same address for some time? Have you been employed by the same employer for several years? Do you make a monthly or annual salary above entry level? Do you have a low debt-to-income ratio? Do you have a credit score? A credit score above 680? If you can answer, “yes,” to these questions, then your chances of instant approval for your credit card application greatly increase.
Know What Type of Credit Card to Apply For
Knowing what kind of credit card you are applying for is just as important as how to apply for a credit card. Study your online credit card application thoroughly to understand the features of the credit card you are applying for. There are many kinds of credit cards, like gas station credit cards or travel rewards credit cards, for example. Most people apply for an unsecured credit card which offers a line of monetary credit and builds a credit history.
- Standard Credit Cards
- Store-Issued Credit Cards
- Secured & Prepaid Credit Cards
Standard credit cards can be used anywhere and usually feature low-interest rates. Student credits cards are typically approved for young people with no credit, no credit history, and little money. You might be instantly approved for a store-issued credit card, but they do not affect your credit history and can only be used for store credit for the business that issued it.
Secured Credit Cards can Help Approval Chances
A secured credit requires you to pay a predetermined money deposit to open it and use it. A prepaid credit card is a credit card that requires you to place money in the account to use it. It is generally easy to get credit card application approval for a secured or prepaid credit. They represent a minimal risk for a company to issue and applicants usually use them to rebuild poor credit histories and to improve low credit scores. It is important to know how to apply for credit. You should also know what type of credit card you want and need. Especially if you are looking for instant approval.
Using Credit Responsibly After Approval
When you use a credit card, you are borrowing funds from a credit card company, bank, credit union or similar financial lending institution to pay for purchases. You pay back the debt as soon as possible or in a deadline documented billing cycle. You will pay interest based on your debt as set by the credit card company. You may have to pay an annual fee to use the card. Based on your credit card application, you will be given a credit limit, which can be anywhere from $500 to $10,000. You may be able to even withdraw a cash advance on the card. Your credit limit is raised periodically by the credit card company based on your history using the card. It is important to pay your outstanding balance as soon as possible, in full and in a timely manner during a billing cycle. Know your payment deadline. If you let credit card debt grow, it will accrue greater interest, late payment and penalty fees. The type of credit card you apply for, and ability to pay off, will affect your credit score and public financial record. Review several different credit card applications from several different companies before you apply.