How to qualify for a credit card

credit-card

Getting a credit card is not as simple as filling out a form and getting approved. You need to meet a set of criteria set out by the credit card provider to be eligible to fet one.

Knowing what steps you need to take to get an approval will save you the hassle in case you do not qualify and if you do, it will help you get through the application process faster and more efficiently.

  1. Make sure you are old enough to get a card. The legal age to qualify for a CC is 18, but if you want to be approved before you turn 21, you need to have your own independent source of income at the moment of your application. If you don’t have it, someone will have to co-apply with you and act as a guarantee to the bank that you will be able to pay back the credit card balance and interest.

There’s no minimum wage you need to earn to apply for a CC, neither do you need to have a full-time income. If you have a part-time job during your studies and you earn enough to pay back the credit card balance, the credit card issuer will consider you for a card.

  1. Have someone to co-sign with you. If you don’t qualify for a CC because you’re not old enough, have a history of a bad credit or don’t have a sufficient income, get a friend or a family member to co-sign with you. It goes without saying that your co-signer needs to meet the credit card requirements for your application to be approved.
  2. Know your credit score. Because charging purchases to a CCis like taking a credit, lenders need to manage their risk in giving out credit cards to individuals. They do this by reviewing their credit score and based on this score they will decide whether one is eligible for a credit, what type of credit, how much credit and how likely they are to repay it. The lower the score, the more likely it is that you will skip payments and the higher the score, the less risky of a borrower you are.

Most credit institutions will accept CC applicants who have a credit score of 700 points or higher, but some would be willing to grant you a credit card if you have a score of 600 and up. Yet others will want you to have a spotless credit score and some will just want to make sure your late payments are not in the last two years.

Remember, that for a lender to see your CC score you need to have a credit card score to start with. How do you get it? There are 3 main requirements to generate a credit score:

 

  1. You need to have a credit file that suggest you’re a living human being. That’s a given in most cases
  2. You must have at least one open account for 6 months or more
  3. You must have at least one account that has been reported to credit bureaus

These are fairly easy to satisfy if you think of the possibility of applying for a CC early.

Should you have an imperfect credit score, this does not mean you can never get a CC.. Some credit card issuers will not approve you again if you have a negative credit history with them but there are others who will approve credit card applicants with bad credit history.

  1. Have your own income. Your income plays major role in your qualifying for a credit card. As mentioned above, there’s no minimum income requirement to be able to apply, but the credit card issuers need to make sure you earn enough to repay your CC balance. In case you are younger than 21, you can indicate your parents’ income as they will be co-signing your application but the same criteria apply to them as well.
  2. Don’t have a lot of debt. Simply having an income is not a guarantee you will get a CC.. Creditors might be looking at other factors before they approve your application. Your housing status, for example, might be part of the approval process. Also, as mentioned above, you need to have a credit score. If you have never taken out a credit before, your application might be declined. Or, you might earn a high income but already have a lot of debt and this might mean you won’t be eligible for a credit card.

If your credit utilization is too high, it is very likely you will not qualify for a CC. How much debt is too much varies by  card issuer and by the type of the credit card you wish to obtain. The general rule of thumb is to keep your credit utilization below 30% of your credit limit. By doing so, you will ensure the lenders see you as a responsible credit user and will likely approve you for a credit card.

  1. Secured CC. People with history of bad credit who cannot get approved for a regular credit card, might be in luck when applying for a secured credit card. The secured  card requires a security deposit against your credit limit before it can be approved. After a year of timely payments you might be eligible for a regular credit card.

Some credit issuers accept a payment as low as $300 to approve you for a secured credit card. If you do not have $300 now, start saving $50 to $100 per month to have enough for the deposit and you will be able to qualify.

 

 

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