If you’re thinking of applying for a credit card, there are a few points to keep in mind. After all, you want to make sure you get the outcome you want.
You see, not only will a rejected application mean you miss out on the credit card you want, but it’ll also leave a footprint on your credit history. This may affect your chances of borrowing credit in the future.
Every lender uses their own criteria to decide whether you’re a responsible borrower and suitable for that particular product. This makes it more difficult to pinpoint exactly what each lender is looking for.
But there are some qualities all lenders are after. To help improve your chances of being accepted, we’ll take a look at the common things lenders typically consider.
You may wish to hold off applying for a credit card for a bit if your credit history isn’t up to scratch. Lenders will use your credit history to determine whether you’ve managed your borrowing responsibly in past.
If you’ve previously missed payments and defaulted on your accounts, or you’ve never borrowed before, lenders are likely to view you as a ‘risky’ borrower. As a result they may choose to reject your application.
Alternatively, if you’re accepted, you may find that the credit card has a lower credit limit and higher interest rate than you applied for to compensate for this risk.
Before applying for any credit, you should check your credit history is correct and up to date. Lenders use one of three credit-checking agencies Experian, Equifax or Callcredit.
So it’s a good idea to sign up and see what they’ll be able to see when they check your credit record.
If your credit history is not in the best shape, it’s a good idea to rebuild it before applying for a credit card. This will give you a better chance of getting the deal you want.
Income and outgoings
As well as your credit history, lenders will look at the money you have coming in and going out of your account each month. This will give them an idea of how much disposable income you have – which is the amount of money you’ve left over after you’ve paid essential bills like your mortgage, rent and utility bills.
Lenders want to know that you’ll be able to afford your monthly repayments. Having a steady income can reassure lenders of this.
If you’re unemployed, you should think carefully before applying for a credit card. Being unemployed doesn’t necessarily mean you won’t be accepted for a credit card, but you should only apply if you’re certain that you can keep up with your repayments.
And if the lender you apply to feels that a credit card may be unsuitable for your current circumstances, your application is likely to be declined.
Because you don’t have a regular income, you probably won’t be able to apply for credit cards offering the most competitive rates.
As we’ve mentioned, applying for a credit card will leave a hard footprint on your credit history, regardless of whether you’re accepted or not. When lenders check your credit history, they can see these marks – and if they see a few spaced close together (perhaps because you’ve been rejected by a few lenders and reapplied), they may think you’re desperate to borrow.
Doing this could help you narrow down your search to cards that suit your circumstances and that you qualify for, which means there’s a greater chance you’ll be accepted.
Here at Ocean we have QuickCheck, which lets you see how likely it is you’ll be accepted for the Ocean Credit Card before you apply, without affecting your credit history. You can find out more about QuickCheck here.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.