Editor’s Note: This is a recurring post, regularly updated with new information.
When you apply for a great job travel rewards card, the last thing you want is to be rejected. Sign-up bonuses, benefits, and points earned are enticing you, so you’ll want to do everything you can to get approved.
In this post, I’ll share some tips on how to increase your chances of getting approved so you can secure a new credit card in your wallet.
Check your credit history and score
When reviewing your credit card application, the most important factors for the issuer are your credit history and credit score. Most major issuers offer customers free access to their credit scores. For example, Capital One offers CreditWise Program with anyone. These services will also give you feedback on the factors that affect your score.
Related: How to check your credit score for free
If your credit score isn’t what you think it is, request a copy of your credit history from the three major consumer credit bureaus to find out the details. To get your copy, visit Annual credit report.com, the only source of free credit reports permitted by federal law. With this service, you can request a free copy of your credit report every 12 months from each credit reporting company. Though between now and December 2023, the site will give you free access to your reports weekly.
Only applies to cards that match your credit profile
Travel rewards cards are usually only offered to people with excellent (740+) or good (670-739) credit score. In general, the more features and benefits on offer, the higher the credit score requirements will be, so don’t expect to be approved for a premium card like Platinum Card® from American Express with a credit score lower than 600.
Related: 6 best starter cards to build your credit
Reduce your outstanding debt
I was furious when I first saw a copy of my credit report. It shows that I’ve got outstanding debt on all my credit cards, even though I have consistently paid my statement balances in full and on time.
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Then I learned why all my credit reports showed I was in debt: Every time my credit card’s monthly statement cycle ended, it generated a statement and report. Report that statement balance to the three major consumer credit bureaus. At that point, the card issuers had no way of knowing if you would eventually avoid interest charges by paying your statement balance in full. Technically, my statement balance balances all of the outstanding debts that are constituted, although I trust that the interest will be waived when I pay each statement balance in full by the due date. expire.
Related: The right way to pay your credit card bill
Even if your statement balances aren’t high, they’re still considered debt and can make the card issuer hesitant to approve a new line of credit for you. The bank is less worried that they will offer you another sign-up bonus than they are worried about extending your credit excessively and risking default.
Once you understand your bank’s concerns and how your statement balance is reported as outstanding, it’s easy to take steps to minimize what’s reported. The first step is to pay off your largest outstanding balance before the end of the statement period for your credit card. On the other hand, paying the balance immediately after your statement closes will not reduce the balance reported to the credit bureau for that month.
If you pay before the end of the statement period on your credit card, you won’t have any outstanding debt. Additionally, you’ll likely experience a small bump in your credit score as your debt-to-credit ratio plummets. I try to do this before applying for a new credit card, and it’s an important strategy when you’re applying for a mortgage or home loan.
Reduce your credit utilization rate
In addition to reducing debt, you’ll also want to maintain a high amount of credit. These two numbers make up your credit utilization ratio, which can be calculated by dividing your total credit card balance by your total available credit.
Related: Credit utilization rate: What it is and how it affects your credit score
While you want to pay off your credit card balance in full before your statement closes for the month, it’s equally important that your denominator stays high, giving you high utilization rates. lower. This can ultimately account for about 30% of your FICO score, which makes it a pretty important factor in determining your credit score. While applying for a credit card can sometimes hurt your credit score a bit in the short term, it actually gives you more credit in the long run, which in turn potentially helps. your credit utilization rate.
Another thing to consider is that when you cancel a credit card, you’re giving back a portion of your credit. This can affect your rate, so you’ll want to consider downgrading to a free annual card instead, or transferring that credit to another credit card in the same banking network.
Pay the outstanding balance to the same issuer
You can also increase your chances of getting approved by reducing or eliminating any existing balances with other cards you have from the same card issuer. Banks can always see this type of outstanding “debt” in real time.
For example, if you are looking to get approved for Chase Sapphire Reserve, you may want to pay off any available balances with other Chase cards before you sign up. In this case, the statement does not need to be closed before applying; the bank will always know your current balance.
Please pay attention to the limitations of the application
Some card issuers limit you to the maximum number of accounts for which you are the primary cardholder. Others will limit the number of applications you can make in a given period, such as Chase’s (theoretical) limit of one personal app and one business card app every 90 days. .
Related: The Ultimate Guide to Credit Card Application Restrictions
Covers all sources of income
A common mistake people make when applying for a credit card is understating their income by not including all eligible sources.
The Credit Card Disclosure and Accountability Act (CARD) allows you to include all household income you have a reasonable expectation to access. The main reason for this rule is to ensure that spouses and non-working partners have equal access to credit.
Also, be sure to include other qualified sources of income such as alimony, child support, disability benefits, investment income, and retirement savings disbursements.
Call for reconsideration
If your application was initially rejected, don’t give up. You can contact bank’s review line and ask a representative to review your application manually. Before calling, try to pay off your current balance, especially with any account you have from the same bank you signed up for.
Related: What I Learned From Each Of My Rejected Credit Card Applications
On several occasions, I called to defend my case and the agent immediately approved my application with no questions asked. Other times, you may have to explain why you want to be approved. For example, you might want to mention the card features and benefits that interest you and avoid mentioning the sign-up bonus specifically. And if you didn’t include all of your income sources at first, ask for your application to be updated.
If that doesn’t work, suggest reallocate a portion of your existing credit line with that bank. Remember, the bank’s priority is to limit your risk in the event you are unable to pay your fees back. By volunteering to change your credit limit, you are enabling the issuer to provide you with a new account without increasing the risk. Finally, you can suggest closing an existing account that’s not being used if it helps the new account get approved.
bottom line
While there’s never a guarantee that you’ll be approved for a credit card when you submit your application, keeping these tips in mind will only increase your odds of success. Credit cards can offer many benefits and rewards, so maximizing your chances opens up new credit card opportunities.
Read more: 3 ways a new credit card can boost your credit score
