It is not as straightforward as filling out an application and being authorized for a credit card. Credit card companies have criteria that they use to evaluate each credit card applicant. It is beneficial to understand how to qualify for a credit card before applying for one. This manner, you can estimate your odds of approval and avoid a credit query if you’re more likely to be denied.
01 Confirm that you are of legal credit card age.
The minimum legal age to obtain a credit card on your own is 18. But, if you are under the age of 21, you must have your own stable source of income before you may be authorized for a credit card. Alternatively, you’ll have to apply for a joint credit card with someone else.
The law does not need you to work full-time to obtain a credit card. Your annual earnings from your part-time university work might be included on your credit card application. If it is sufficient to pay off a credit card balance, the credit card company will consider you for a credit card.
02 Earn your own money.
To be eligible for a credit card, you must have your own source of income. Credit card issuers were no longer permitted to assess household income for credit card applicants as of October 1, 2011. Later, the restriction was changed to allow applicants 21 and older to use their partners’ income if they have “reasonable access” to it, such as deposits into a shared account or frequent transfers from the wage earner’s account to the card applicant’s account.
The new rule states that you cannot include your or your parents’ income on a credit card application unless you are seeking for a joint credit card or they are providing you money or paying your bills on a monthly basis.
Having a consistent stream of income allows you to pay for your credit card transactions. Not only do you need to have your own source of income, but your monthly income should be sufficient to cover the credit limit you’re requesting.
03 Have a good credit history.
A solid credit history will assist you in obtaining a credit card. The higher your credit score, the more likely you will be approved. Some credit card companies only admit applicants with perfect credit reports. Others will allow your application if your late payments are not more than two years old.
A bad credit history with a certain credit card issuer may prevent you from being authorized by that same issuer. For example, if you had a charge-off on a previous American Express credit card, you may be denied for a new Amex credit card.
Don’t be concerned if you don’t have perfect credit; there are credit cards that accept applicants with a poor credit history.
04 I’m not in a lot of debt.
Before approving your application, credit card companies will analyze the amount of your other credit card balances and loans. You may be refused if your credit utilization is too high. The amount of debt that is considered excessive varies by credit card company and credit card. Keep your credit card debt to less than 30% of your credit limit.
Based on your other debt payments, a credit card company may evaluate your debt to your income to determine whether you can handle another credit card bill. A high debt-to-income ratio indicates that you do not earn enough money to repay another credit card load.
05 Get a co-signer.
If you can’t get a credit card on your own because you’re not old enough, don’t have enough income, or have bad credit, you can have a friend or family member co-sign your application. For both of you to be authorized, the co-signer must meet the credit card’s requirements.
When you ask someone to co-sign for you on a credit card, understand that person is taking a risk. If you do not pay the debt, the co-signer will be held liable for the sum as well as any credit harm caused by late payments on the account.
06 Save money aside for a security deposit.
Individuals with bad credit or new credit who are unable to obtain a conventional credit card may have better luck with a secured credit card. Before you may be approved for a secured credit card, you must make a security deposit against your credit limit. If you make on-time payments for about a year, you may be eligible for an unsecured credit card, assuming no other negative information is added to your credit report.
Several secured credit card providers will accept a $300 security deposit. If you don’t have that much, try saving $50 to $100 every month until you have enough for a good security deposit.