Apply with bad credit and your application will be denied or you may be referred to an agent who will share the sad news with you. You can avoid a rejection by keeping in mind five considerations when applying for a new credit card.
1. Your payment history. Much weight is placed by creditors on how you have handled credit to date. A spotty history will work against you as will one that shows one or more late payments have been reported to the credit reporting bureaus. Always strive to make your payments on time.
2. What you owe. Owing money is not a problem. How much you owe especially in relationship to what you make and what you own does matter. Always avoid maxing out your credit cards. It is better to have two cards with small balances than one card with a big balance.
3. Your credit history. How long have you had credit? If you have no credit or you haven’t had accounts for long, then creditors will have trouble extending new credit to you. It is always difficult for young consumers to obtain fresh credit — you need it, but lenders are not always willing to give it to you unless you already have it. You do not have it, because lenders won’t approve you. It is better to apply for a store or gasoline credit card first as these retailers approve nearly everyone with a job. Use those cards and pay them off regularly for a year before applying for a new credit card.
4. When credit is new. Credit card issuers will also look at your new credit and how you use it. Young credit can work against you, but it can also work for you if you quickly develop a track record for making timely payments.
5. Your credit types. Not all credit is equal. Creditors will look at the types of credit you have and score you accordingly. Auto loans, mortgages, student loans, credit cards and lines of credit are some of the considerations your creditors will weigh when evaluating your application.
Ultimately, the five considerations mentioned here are what make up your credit score. That three-digit number is available from the credit reporting bureaus and can give you an excellent idea whether your credit card application stands a chance of being approved.
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