How do lenders decide who to approve?
Lenders look at a variety of factors and the criteria differ by credit card. Some credit cards might need a certain income or credit score – others may not be as limited.
While many people think it all boils down to your credit score, that is actually just one factor in the overall picture.
Lenders will consider factors like your:
- age and residency – you'll have to be over 18 and you’ll likely need to be a UK resident to get a credit card
- stability – lenders favour reliability factors like being registered on the electoral roll, having a permanent address and reliable income
- income and outgoings – this can show your affordability and help a lender determine if it makes sense to lend to you (and what your credit limit should be). They’ll also look at what existing debt you already have.
- credit history – such as your past behaviour with borrowing
- credit score
There are many lenders specialising in certain situations, so even if you have thin credit or a less-than-perfect history, you may still be able to get a card.
What should I do to prevent my application from getting declined?
Do your research
Firstly, research what credit cards are available. Don’t apply for the first card you see without researching and checking the terms and conditions. Different credit cards will have their own eligibility criteria, so decide which one you’d like to apply for and research the pros and cons of each one, such as any benefits, rewards, fees and interest rates.
Before applying for a credit card, you should do your research and ensure you’re applying for a card that suits you – whether it’s a credit builder card, balance transfer or pre-paid card
Check your credit score and history
It’s best to check your credit score and history before you make an application, this will help you determine what kind of card you will be eligible for.
If you have a good credit score, you may have more options available, if not – you could look at specialist credit rebuilder cards.
It’s important to check for any errors or mistakes on your report and if you find any, you can report them to the credit reference agency. You could look for:
- your address
- your income
- if you have any financial ties and if this has changed – such as to a partner or ex-partner.
Use an eligibility checker
When you use an eligibility checker, it’ll run a ‘soft check’ on your credit file. This means it won’t leave a mark for lenders to see in the future.
While an eligibility checker can be a very good indication of approval, you should be aware that it’s not absolutely guaranteed until you submit your application. Some will use phrases such as ‘100% pre-approved', but if the lender finds anything on your application such as fraud, or identity issues, they can still decline your application.
How long should I wait to apply again after my application is rejected?
If you’ve been rejected for a credit card, avoid making multiple applications to other lenders straight away. This can create even further damage to your credit file and can give lenders the impression you’re desperate for credit.
Firstly, if your application was declined, do a bit of research, and try and find out why. If it’s your score, try to improve it before you apply again.
How can I improve my chances of getting accepted?
If you have a low credit score, then you should try to improve it before you reapply. A better score will help your chances of taking out credit.
You can improve your credit score quickly by:
- registering to vote
- joining the Rental Initiative Exchange
- lowering your debt.
However, consistently managing any bills, direct debits and debts that you have will help your score to improve the most.
Regularly check your credit report and make sure it’s up to date. When your score improves you should consider reapplying. You can check your Equifax report for free with CredAbility.
It might be difficult to build up a credit history without already having any. In this case, continue to work on your score and research credit cards designed for bad credit or poor/no credit history.
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Intelligent Lending Ltd (credit broker). Capital One is the exclusive lender.