With so many credit cards offering enticing rewards, you may be dying to add a new one to your collection. While finding the right card is easy, getting your application approved is the tricky part. Thankfully, there are some strategies you can use to increase the odds of getting the card of your dreams.
Know your credit score
Your credit score plays a huge role in whether your application will receive a stamp of approval. The higher your score, the more likely you are to be approved for a new card. But don’t just take our word for it. The Consumer Financial Protection Bureau studied the approval rates for general purpose cards and came up with the proof to back it up. They found that applicants with a credit score of 720 and above were approved at a rate of 85.5%. Meanwhile, those with scores between 660 and 719 were only approved 58.7% of the time. Finding out your credit score is easy. Most banks and credit card companies already provide free FICO scores to account holders. They’ll even pinpoint factors affecting your score so you’ll know what you need to work on.
Reduce your debt
Creditors like to know that you’re capable of managing your debt. Every time a billing cycle ends, your credit card balance is reported to each of the credit bureaus and appears on your credit report. By carrying a high balance, you’re showing them that you may not have your spending under control. Shift the odds back in your favor by keeping your debt to a minimum. This may mean making multiple payments throughout the month to keep the balance low. Another factor that can make or break you is your payment history. Always pay your statement balance by the due date to avoid hurting your credit score.
Apply for the right cards
Cards that offer miles, points or cash back are attractive but are typically reserved for people with above average credit. Rather than roll the dice and hope for the best, only apply for cards whose qualifications you meet. Sites like CreditCards.com can help you find the perfect card based on your credit profile. By sticking within your range, you’re more likely to get approved.
Be honest about your income
As part of the application process, you’ll be asked to provide your income so the lender can assess your debt-to-income (DTI) ratio. Generally speaking, you’re in good shape if your DTI is 35 percent or lower. Anything higher and you’ll need to increase your income or reduce your debt. There are online calculators that can help determine where you stand. No matter how bad you want a new card, it doesn’t pay to exaggerate your income on the application. For starters, you may get approved for a card that you can’t afford and wind up drowning in debt. Plus, if the issuer finds out, you may be slapped with a $1 million fine or face 30 years in jail for credit card fraud. Either way, lying just isn’t worth it.
Space out your applications
Even though you may be eager to get a new piece of plastic, keep the applications to a minimum. A good rule of thumb is to wait six months between applications. Whenever you apply for new credit, the lender must do a hard inquiry which can drop your credit score about 5 points per inquiry. Submitting multiple credit applications in a short period of time also sends the wrong message to lenders. In their eyes, it’s a sign that you’re having financial trouble and may be looking for relief. myFICO reports that people with 6 or more inquiries are 8 times more likely to go bankrupt than someone with none.