You’ve probably heard your friends and family talk about the benefits of having a credit card. There are definitely perks to having a credit card, but how do you get approved for one? If you have no credit or poor credit, it may seem like it would be impossible to be approved for a line of credit.
There is no way to guarantee you’ll be eligible to get a credit card but there are some ways that may improve your chances of approval.
Get Started on the Right Foot
Building good credit can be done if you stay on top of your bills from the beginning. Credit card companies look at your payment history as well as the following:
- Only apply for what you need. You can always apply for an additional card or two down the line if you decide they’re needed, but acquiring multiple loans and credit cards in a short time frame makes lenders think your finances have taken a turn for the worse.
- Stay below your credit limit. In fact, you should aim to keep your overall credit utilization ratio under 30% for each of your lines of credit.
- Always check your statements to ensure they are accurate. You want to do this so that your score isn’t negatively affected by incorrect information. This is also helpful to keep an eye out for suspicious activities and potential security risks.
- Pay more than the minimum if you can. If you can only afford to pay more than the minimum once in a while, that’s fine. Any higher payments will look good for you.
- Know your credit score and make sure to check your credit report. Credit reports are usually accurate, but errors do happen. You can get one free copy of your credit report per year through the 3 major credit reporting companies.
Monitor Your Credit
Before you get a credit card, you should get a copy of your credit report so you can see your score and the information that is impacting it. You’ll be able to access information like your payment history, previous credit checks, and recently acquired accounts. When you apply for a credit card, the bank will check your credit score to see how likely you are to make your payments on time.
Don’t Use too Much Credit
In order to ensure you don’t end up with a credit card you can’t afford, it’s important to understand your debt to income ratio. This comparison of your income versus what you owe will help you figure out what kind of monthly payments you can afford.
If your credit isn’t at a point where you are able to get a credit card, it is not the end of the line. Fixing credit and establishing credit from zero takes time. If you need to increase your approval chances quickly, consider becoming an authorized user on a friend or relative’s account, get a secured card, or getting a loan with a co-signer.