Getting Approved for a Credit Card: How to Improve Your Odds

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At a time when Americans are relying on credit cards to get through a tough time of inflation, it’s getting harder and harder to get approved for a card.

New data of the Federal Reserve shows that lenders are increasingly demanding with whom they approve new credit card. About 19% of banks have started to tighten their standards of credit card approval over the past three months, according to a Fed investigation released on Monday.

When the Fed asked the same question last quarter, no bank said it was tightening its standards.

“As lenders grapple with rising defaults, a high inflation environment, capital constraints and a potential recession, lending at levels below prime risk is expected to slow over the next two final quarters of 2022,” the report said.

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For reference, a prime number credit score is often considered to be between 660 and 719. Credit card providers are starting to think twice about approving applicants with scores below this range.

Meanwhile, credit card debt hit an all-time high between July and September, according to credit bureau TransUnion, suggesting people are use credit cards to cope with soaring consumer prices.

“Consumers are being pressured on multiple fronts, first by this high inflation environment, and second by the interest rate hike the Federal Reserve is putting in place to bring it down,” Michele Raneri, vice-president, said on Tuesday. President of TransUnion, in a press release. latest news from the office quarterly report on the development of credit.

Consumer prices remain stubbornly high despite the Fed’s aggressive efforts to fight inflation. The inflation rate for the year ending in October was 7.7%, the Department of Labor said Thursday. The Fed has six times interest rates so far this year and reported more hikes to come. The Fed’s aggressive action to reduce inflation had side effects. In this case, getting a credit card might become more difficult for people without outstanding credit scores.

How to get a credit card approved

If your credit score is below 660, that doesn’t necessarily mean you can’t be approved for a credit card, but you may want to be a little more deliberate in your search.

Here are some strategies you can use to improve your chances of approval.

1. Check your credit before applying

If you don’t know your credit score, don’t start applying for credit cards right away. First make sure to check your credit report with the three main credit bureaus (Experian, Equifax, and TransUnion) to at least get an idea of ​​your overall approval chances.

Keep in mind that your credit report won’t include your score, so you’ll want to check your credit score separately. You can do this at any of the offices. (Just check that it’s free). If you already have another credit card, the credit card provider may also let you check your credit score for free.

In addition to your score, the credit card provider will also consider other related items such as the length of your credit history when deciding if you are approved. If your report is “thin” – meaning you don’t have a strong credit history – you could be turned down by tough credit card providers.

2. Apply for the right credit card for you

Blowing up applications to many credit cards could hurt your chances of being approved, so if you’ve already been turned down, you might want to wait a few months before applying again.

Likewise, you’ll want to request cards that you think you can realistically be approved for. Credit card providers may not list exact credit score requirements, but a FICO score above 660 (and ideally above 700) will certainly help your chances in today’s environment.

Premium Rewards Cards generally require an excellent credit rating — probably 720 or more — and a healthy debt-to-income ratio.

If you are having difficulty qualifying, you can consider a secured credit card first. It works the same as other credit cards, but will require a refundable deposit before you open your account.

3. Improve your credit

Although it’s easier said than done, improve your credit situation is the best way to make sure you are approved for a credit card.

A common strategy that new credit card users use is become an authorized user on the card of a trusted family member or friend. It’s a bit of a shortcut: you can access the primary cardholder’s line of credit without having to submit to a credit check yourself. All the while, you will be able to build your own credit.

However, if that’s not an option, you’ll have to resort to some old-fashioned credit enhancement strategies, such as paying off your other credit cards if you have them, which ultimately lowers your credit ratio. use of credit.

Other credit building strategies include removing any incorrect information from your reports and enrolling in credit enhancement programs that allow you to strengthen your credit by including certain on-time bill payment histories.

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A credit repair company could improve your chances of being approved.

Credit repair companies, like Lexington Law, specialize in research and assistance to help you remove errors on your report to help improve your credit.

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