Finance Globe

U.S. financial and economic topics from several finance writers.
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Credit Card Approval Factors

Credit Card Approval Factors

Do you ever wonder what a credit card company looks at when deciding to approve or deny an application? With this knowledge in mind, you may be able to better your situation as to improve your chance of an approval.

Here are several of the most important credit card approval factors:

1. Utilization. Just the same as your credit score, the amount of available credit will impact your approval odds. In short, if your current credit cards are maxed out, you are considered a bigger risk than if you had a large amount of available credit.

2. Age of accounts. Credit card companies like to see a long history of open accounts, as this shows that you have remained responsible for an extended period of time.

3. Number of delinquencies. Do you make it a habit of paying your bills late? If so, there are sure to be several 30-day delinquencies on your credit report. If this is the case, lenders will take this into consideration when deciding whether to approve or deny your application.

4. History of an installment loan. Do you have financial experience with more than credit cards? This goes a long way in showing that you are able to access and manage money in a responsible manner. Unlike credit cards, installment loans have a fixed monthly payment. From a consumer point of view, this requires that you implement a budget and remain disciplined month after month.

5. A mortgage. Many people overlook the fact that paying a mortgage can work in their favor when applying for a credit card. This proves that you have what it takes to pay a high expense loan. It also suggests that you are financially stable.

Are these the only credit card approval factors? Of course not. Lenders take a variety of details into consideration, doing their best to make an informed decision that’s best for the company and the consumer.

The best thing you can do is to remain financially responsible, month in and month out. If you do this, you put yourself in good position to receive an approval when the time comes.

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Comments 1

Frank on Friday, 26 August 2016 13:16

This a great summary, and the major factors lenders look at. I also wish the lenders were more forth right about their analysis and calculation, but at times it does seem like a black box.

This a great summary, and the major factors lenders look at. I also wish the lenders were more forth right about their analysis and calculation, but at times it does seem like a black box.
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Monday, 26 August 2019

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