How to Apply for Credit Card Approval
Before applying for a credit card, you nee to convince the creditor that you are a good credit risk, someone who will pay the debt in a timely manner. If you are applying for credit for the first time, you may need a co-signer, or you may first need to obtain a secured credit card by posting a deposit or other collateral. If you have a spotty credit history, you should examine your credit report and take steps to resolve any outstanding issues.
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Instructions
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Obtain a copy of your credit bureau scores and information by contacting each of the three major credit reporting agencies (Equifax, Experian and TransUnion). The Fair Credit Reporting Act guarantees your right to obtain your credit records, at no cost, once per year. Visit www.annualcreditreport.com to request your credit report.
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Review your credit history, paying particular interest to inclusions of poor credit history. The Board of Governors of the Federal Reserve System recommends against using credit-repair services before having a full understanding of how your credit behavior affects your credit score. A record of slow payment history and delinquent accounts is especially troublesome for applicants seeking any type of credit.
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Contact each creditor that has posted negative information on your report. Accounts that have been sent to a third-party collections agency will require contact with the agency for resolution.
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Work out a plan to bring each account into as good a standing as possible. Promise to pay an amount you can afford either in a lump sum or installments to bring the accounts current. Get assurance from the company or collections agency that fulfillment of the plan will result in an update to your credit report. It is unlikely the agencies will remove the derogatory information. Oftentimes the best result you can achieve is an amendment to your credit report showing the account in good standing.
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Total up all forms of income that you receive. Your income will determine your ability to pay your debt. The three main factors that make you a good credit risk are your stability, ability to pay, and willingness to pay. Willingness to pay is defined by your credit history. Ability is defined by your income and other financial resources.
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Determine your work history dates to be as accurate as you can on the credit card application. Stability (one of the three major factors) includes the length of time you have worked with your current employer and the time you have lived at your current address. Applicants with a relatively short home or work history will have a more difficult time establishing stability.
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Secure a co-signer. A co-signer is a person who is willing to lend his financial credentials to your credit card application. The credit card company will consider the creditworthiness of both you and the co-signer, with your assets and credentials bearing most of the burden. Applicants with a relative short credit history or no credit history will benefit from having a co-signer joining their application.
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Contact the credit-card issuer as soon as possible with the information described in the steps above. Applicants with a troublesome credit history may be able to include other information to sway the evaluators. Other information that may prove helpful include payments that have been made faithfully but do not appear on the credit reports. Direct communication with the person(s) in charge of reviewing your application could result in discovering some alternative forms off proof to improve your application's chance of approval.
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Open and maintain a secured credit card. Secured credit cards are backed up by a deposit or other collateral. Applicants with credentials unworthy of an unsecured account can show a positive pattern of payment with a secured credit card. Maxine Sweet of Experian advises that you seek a secured card from a financial institution that will report your activity to the credit agencies. Many secured credit cards have a provision for transitioning the account into an unsecured status after a definite time, providing the account was managed responsibly.
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References
- Forbes.com: How to Get Approved for a Credit Card
- Ftc.gov: Fair Credit Reporting Act PDF
- Bankrate.com: 10 Questions Before Getting a Secured Credit Card
- Equifax: Credit Reports, Credit Scores, Identity Theft Protection
- TransUnion: Credit Reports, Credit Score, Credit Check
- Experian: Credit Report, Credit Score, Credit Check
Resources
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