9 Tips for Getting Approved for a Credit Card

Whether you’re applying for a first credit card or you already have a card or two in your name, you can take steps to boost your chances of getting the card you’re after right now. Most moves you should make have to do with keeping your credit score in tip-top shape, or trying to improve it so you become a more attractive credit applicant. You can also take steps to fix problems that may be hurting your credit right now, even if the issues aren’t your fault.

Here are the steps you can take right now to improve your chances of getting a new card, whether you’re after a top-rated travel credit card, a cash back credit card or a starter credit card to build credit for the first time.

1. Check your credit score

Before you apply for a credit card, you should check your credit score to know which cards you may be eligible for. This is important since the best rewards credit cards on the market today usually go to individuals with good credit or better, or with FICO scores of at least 670. That said, there are also credit card options for people with fair credit (FICO scores of 580 to 669) and even poor credit.

How can you check your credit score? See if you have free access to credit scores through options like Capital One’s Credit Wise, Chase’s Credit Journey and Discover’s Credit Scorecard. Credit cards you already have may also offer a free credit score on your monthly statement.

2. Correct errors on your credit reports

If you haven’t checked your credit reports lately, but you feel that some negative information may be dragging your score down, you should remedy this situation right away. You can start by accessing your credit reports for free on AnnualCreditReport.com.

If you find incorrect information on your credit reports, you have the legal right to formally dispute this information and have it removed. According to the Consumer Financial Protection Bureau (CFPB), some common errors in credit reports that could harm your credit score include closed accounts reported as open, balances reported twice and accounts with incorrect balances or credit limits.

3. Note your debt-to-income ratio

Add up all your monthly debt payments — including your mortgage and any co-signed personal loans — and divide it by your monthly gross income to calculate your debt-to-income ratio (DTI). For example, if you pay $2,000 a month in debt and your monthly income is $8,000, your debt-to-income ratio is 0.25 or 25 percent.

Most creditors prefer DTIs less than 36 percent. You could still get approved with a DTI between 36 and 41 percent, but it’s more challenging to get approved for credit with a DTI greater than 41 percent.

If your DTI is too high, work on paying down your debt and increasing your income, if possible. Once you lower your DTI, you’ll have better chances to get approved for a credit card.

4. Keep your credit utilization ratio low

How much debt you have in relation to your credit limits is a huge factor in your credit score. In fact, “amounts owed” make up 30 percent of FICO credit scores.

If you have credit cards or other types of revolving debt already, it can help to keep your credit utilization ratio low and avoid maxing out your credit limits. Most experts recommend keeping your credit utilization ratio below 30 percent of your available credit for the best results, which means carrying less than $300 as a balance for every $1,000 in available credit you have.

5. Pay your bills on time

Paying your bills on time may seem like an obvious tip, but it can help your credit score more than you think. This is because, by and large, your payment history is the most important factor that makes up credit scores at 35 percent.

Because your payment history is so important, you should make sure you pay all your bills early or on time each month, with no exceptions. If you’re worried you’ll forget, consider setting up some of your bills on autopay.

6. Maintain a diverse mix of credit

Another factor that impacts your credit score is your credit mix, or the different types of credit you have — like mortgages, personal loans, student loans and more. This factor makes up 10 percent of your FICO scores.

While you may not have the chance to improve your credit mix when you’re first starting out, adding new types of credit to your portfolio over time can help your score. For example, you can improve your credit mix when you purchase a home and take out a mortgage, or if you take out student loans to pay for higher education.

7. Look for cards with preapproval

Some credit cards let you check your approval odds before you apply, and the process only results in a soft inquiry on your credit reports. This means you can get a good idea of whether you’re a candidate for a card without actually applying and facing a potential denial.

While some card issuers offer this option directly, Bankrate’s CardMatch™ tool lets you see if you’re eligible for various cards. To see a selection of cards you meet the minimum criteria for, CardMatch only requires you to share information like your name, address, employment status, monthly housing payment and the last four digits of your Social Security number (SSN).

8. Avoid applying for too many cards at once

Because each credit card application results in a hard inquiry on your credit reports, you should avoid applying for too many cards in a short time. While there are no hard and fast rules on how to time applications, the rule of thumb is to wait three to six months between credit card applications — or until your credit score improves into the next “tier” of credit to qualify for a card.

If you applied for a credit card with a poor credit score of 560 and were denied, for example, you should improve your score at least until you’re in the “fair” range (FICO scores of 580 to 669) before you try again.

9. Apply for credit cards that fit your credit score

Once you know where your credit score stands, you can look for cards that fit your profile. This means comparing credit cards for good credit, fair credit or even poor credit, and looking for options that offer the perks and features you want the most.

If you have no credit or a low credit score, keep in mind that you may have to start with a credit-building card. Once you improve your credit score, however, you may be able to move up to credit cards with better rewards and perks.

Secured credit cards are often the best choice for people with no credit or poor credit, since they are easier to get approved for. These cards require a cash security deposit as collateral, but you can get the deposit refunded when you close or upgrade your account in good standing. Most of the top secured credit cards available today have no annual fee, and many offer cash back rewards for spending.

What to do if your credit card application is denied

If you apply for a credit card and you’re denied, don’t despair. This doesn’t mean you will never get the card you want, or that your credit score will never improve. Issuers must explain why it denied you a credit card to adhere to the Fair Credit Reporting Act. You can use that information to focus your efforts on improving your creditworthiness.

When you’re denied the card you want, consider these steps:

• Check your credit reports. Check your credit reports at AnnualCreditReport.com to look for incorrect information that may be harming your score. If you find incorrect balances, credit limits or other details, dispute it with the credit bureaus that list the information.
• Spend some time improving your credit. If you were denied a card you want due to having imperfect credit, spend some time improving your credit standing before you apply again. This means keeping debt levels low, paying all your bills on time and adding more types of credit to your profile when you can.
• Pay down debt. Another factor that could be dragging your score down is how much debt you have. If you owe more than 30 percent of your credit limits on other credit cards or revolving accounts, paying down as much debt as you can to improve your score.
• Make sure to list household income on your application. Finally, make sure you list your household income on your credit card application the next time you apply — especially if your personal income is low. Listing household income that includes your spouse or partner’s income on an application is perfectly legal in most scenarios, and it can give you a better shot at being approved.

The bottom line

If you want to get a new credit card this year, make sure to have an understanding of the factors that may be holding you back from the card you want. From there, you can take steps to improve your creditworthiness.

Knowing your credit score can help you determine the card types you may be eligible for, and the fact secured credit cards are easier to get approved for means you always have at least one option at your disposal. You can also take steps to boost your credit score incrementally over time, which can help improve your chances of getting better cards in the future.