Consumers are often bombarded with credit card offers. There are kiosks at airports and malls, advertisements on tv, junkmail in your mailbox, and of course advertisements online. It’s no wonder credit card applications seem like a breeze. Many credit cards let you sign up online and get approved in less than five minutes.
While getting approved for a credit card is easy for most, others might have a tougher time. Those who find it tough include those with no credit or short credit history, have delinquencies, or little to no income. We believe credit cards are a valuable financial tool when used responsibly. For those who are ready for the responsibility of using a credit card, but are having difficulties getting approved, this article if for you.
You Have No or Short Credit History
Applying for a credit card can seem like a “catch-22.” To build a good credit score you need credit, but to get credit, you often need a credit history. For example, you may have no credit or a short credit history because you’re a millennial just entering university or you’re new to Canada. If you’ve never had a credit card, you may find it tough to get approved. You don’t want to apply for too many credit cards and get rejected because that can lower your credit score, compounding the problem.
If you’ve been rejected a couple times, it’s worth considering a secured credit card or one for people with less-than-perfect credit. With a secured credit card you make a cash deposit in the amount of your credit limit. By using the card responsibly and paying off the balance on your secured credit card in full and on time, you can build up your credit history and get approved for a non-secured credit card next time.
You Have A History of Delinquencies
Returning a library book late is bad because you’ll incur a fine, but regularly paying your credit card late is even worse because it could lead to a lower credit score. This makes it tougher to apply for a credit card. Issuers may think twice before approving your application. That’s because payment history is the top factor that influences your credit score. If you can’t handle paying the credit card you already have on time, what are the chances you could handle another?
If you’re in financial difficulties do your best to pay at least the minimum payment (plus $10) to keep your good credit score intact and make it easier to get a credit card later on.
You’ve Been Late on Your Payment 30 Days or More
Being late by a couple days on your credit card payment because your financial institution took its sweet time to process the payment is one thing (that’s why you should always pay it at least three business days in advance), but being late on a credit card payment by 30 days can hurt credit score. Issuers will pull your credit report before approving your new credit card application. Depending on how late your payment is, there are different ratings on your credit report. By paying your credit card on time and in full the next several months, you can help improve your chances of being approved on your next application.
Do you have no or little income? You might have a tough time getting a credit card. Credit cards may have earned the nickname “easy credit,” but that doesn’t mean issuers will approve them for everyone. Issuers are in it to make a buck, too. If you’re unemployed, seasonally employed or don’t earn very much, you may find it tough getting approved. Issuers are hesitant to approve your application – and rightfully so. They want to make sure you have the ability to repay any balances you charge on your credit card.
You’re required to provide your income on credit card applications. Some so-called premium credit cards that earn higher rewards have income thresholds – if you don’t meet the requirements, say, $70,000, your application will be denied, which could hurt your credit score.
The Bottom Line
If you’re having a tough time getting approved for a credit card, it pays to figure out the reason. If you have no credit, a short credit history or little to no income, a co-signer or secured credit card may be your answer. By working hard to build your credit history, you won’t have “credit card anxiety” the next time you apply for a credit card.