Whenever you apply for credit, a hard inquiry is made and hard inquiries will negatively affect your credit score. Even though the effects are minor and temporary, you’ll want to avoid applying for multiple credit cards and loans. Since you should be selective when it comes to applying for a credit card, you’ll want to apply for one that you’ll get approved for, so that you didn’t make a hard inquiry for nothing. It can be difficult to predict whether you’ll get approved for a loan or credit card, but there are some things you can do to increases your chances.
The next time you’re going to apply for a credit card, be sure to:
Carefully go through your credit report
Before you apply for a credit card, you’ll want to look at your credit report first to see if it’s even worth doing at the moment. Put yourself in the lender’s shoes and determine if you would offer credit to someone that had your credit report. If the answer is no, you may just want to hold off on applying altogether. If there are some problematic things showing up on your credit report, it’s up to you to determine if you can fix them. You may want to opt for a secured credit card in the meantime as you work on building your credit score back up and taking care of delinquent accounts. If there are any problems on your credit report that are simple fixes, however, you may want to just take care of them and wait until they are removed from your credit report. Check again to make sure that they’re gone, and then apply for a credit card.
It’s important that when you do look at your credit report, you do more than just take note of your scores or your accounts. You’ll want to really pay attention for anything that seems off, or downright incorrect. It’s not uncommon for credit reports to contain errors, and there could be a mistake on your credit report that could be bringing your entire credit score down. Even a single credit report error can be the reason that your credit card application is turned down, so if you do notice an error, take action by disputing it before you apply for a credit card.
Lower your credit utilization rate
If you already have a lot of credit cards and they’re maxed out, or getting close to their limits, you’ll want to pay them down before you apply for another credit card. If you can, pay them off completely, and wait until your payments post completely. Check your credit report again to make sure your new balances reflect, and that lenders will see a low credit utilization rate. Otherwise, if you’re already using up a lot (or all) of your available credit when you apply for a credit card, your chances of getting approved likely won’t be good.
Know what you’re applying for
Don’t just apply for the first credit card offer you receive or that seems like a great program. Every credit card program has its own criteria that must be met. It’s one thing if you’ve got a great credit score and flawless credit report, but if your credit ranges from poor to so-so, researching credit cards is very important. Credit cards with lower interest rates and other perks are usually reserved for consumers with better credit scores, so if you apply for a credit card with strict criteria that you can’t meet, you’ll likely be denied. Depending on how poor your credit is, you may have to settle with a credit card that has a low limit and a less-than-ideal rate. But it’s a start, and can help put you on the path towards establishing good credit.
Don’t miss any required information
When you’re filling out a credit card application, it’s important to include all required information, and to make sure all information you include is accurate. If you’re filling it out by hand, it can be especially easy to overlook a required field. But omitting even just one piece of required information can be the reason that your application is turned down, so be sure to carefully double-check your application before sending it in.
Are you receiving long-term annuity payments, but need your money sooner? Peachtree Financial Solutions may be able to help. Contact Peachtree today to learn more about selling future structured settlement payments for a lump sum of cash.
Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.