6 Important Things to Know About the Credit Card Approval Process
You already know that your credit plays a huge role in your life. From buying a home and car, to simply buying day-to-day purchases without cash, your credit score and creditworthiness are extremely important.
There’s a good chance that you don’t know too much about the credit card approval process though. The fact is that most credit card companies simply aren’t that forthcoming when it comes to this information.
Use this guide to learn six important things you need to know about the credit card approval process today.
1. Secured Cards Build Credit
For people without much credit, it can be hard to get started with a card these days. After the financial crisis of 2008, not as many lenders are willing to take chances on the young or individuals without an existing credit score of merit.
One place that you’re likely to always get approved is the secured card though. With these cards you pay a deposit, but you start building credit right away.
2. Your Credit Score is King
A credit score over 630 is generally considered average, while anything in the 690 and above range is good. When lenders look at you for a card, they’ll be looking at this score first and foremost.
Check your credit score before applying for a new card. You can even go online and see what the average score for a successful approval is.
3. Income Information is Important
How much money you make shows your likelihood of being able to pay for purchases if you use your new card. Even if you don’t plan to use your card much, lenders will look at it as though you will.
Use correct income information, but don’t forget anything. Alimony, child support and settlements all count as income along with your work income.
4. Rewards Cards are Harder to Get
Rewards cards are often some of the hardest to get because they typically have low yearly rates and offer money back for spending. To get these cards, you need to have a solid credit score.
If you’re new to credit, it’s best to wait on these cards if you don’t have anything in your wallet already.
5. High Fees, More Risk
One of the big pitfalls of the current credit system is that cards given to many high-risk, new candidates have high interest rates. While there’s no problem getting one of these for some, you need to make sure you don’t dig a hole with your spending.
Instead, use these cards to make small purchases you can pay off right away. By doing this you’ll build a solid credit history that will open you up to better cards in the future.
6. There’s No Magic Number
As much as people want to hear a magic number of credit cards they should have there simply isn’t one. In general though, having about five credit cards can be beneficial, especially if you do use them.
Keep your credit utilization rate below 30% on all cards if possible.