You will qualify for a premium credit card with terrific benefits and perks if you have a good to excellent credit profile. With less-than-favorable credit or no credit history, the selection will be limited, but the cards will still be of good quality.
Some issuers will send preapproval offers for the best cards to those with good credit, but you can also use online tools to søk or search for the cards you're eligible for before formally applying.
A credit card is an unsecured revolving line of credit with varying tiers offered based on an applicant's credit. The priority is determining whether you can pay the monthly bill. If you have a good to excellent score, some issuers will send preapproval offers to entice business.
If you're looking for a new card, you can search for the best option using online tools to obtain preapproval before formally applying. The issuer will do a soft credit pull when performing a preapproval, as opposed to the hard credit pull done with an application.
How will issuers determine eligibility to present a credit card offer? The priority is to ensure the client will be able to pay the debt. This means looking at the credit profile and finances. Here are details on the criteria.
The credit profile and score are a primary indicator to a credit card issuer whether a prospective client will be capable of paying a monthly bill promptly and consistently. According to FICO scoring, the range for scores starts at 300 and goes to 850, with the calculations based on individual profiles.
Late pays, the age of credit accounts, credit utilization, and the mix of credit impact this rating. Once the issuer qualifies you for a card, they will use your credit score to decide the interest rate and which card to offer. The higher your credit score, the lower the risk you'll be considered.
This will ensure the best credit card with more favorable interest along with benefits and perks. On the other hand, lower interest will mean higher interest and limited benefits.
The best credit cards will be reserved for borrowers with good financial standing. The issuer will use income to determine whether you're a good candidate for a new card and the amount of credit to issue. Again, this is a factor the credit provider will use to determine whether you can pay the balance.
Typically, the provider will also inquire about employment status to confirm a steady, stable income. Often, housing details and possibly other factors will be used to decide which card is best for you as well.
Regardless of your credit score, there's a credit card that will suit almost any circumstance. Most providers use FICO scoring to gauge which cards to offer their clients. If your score is less-than-favorable or you have no history, a secured card is often a good choice.
With a secured credit card, issuers request a deposit that will serve as the credit limit. When the balance is paid promptly and consistently, you can eventually graduate to an unsecured card, and your secured card deposit will be returned to you.
Until then, the issuer has less risk with the secured card since they can keep the deposit if you default on the card. Even individuals with poor credit have a better chance to obtain these cards.
When trying to get approval for a new credit card, the first step is to get preapproval. This is to learn if you meet the criteria for the ideal card.
If you don't meet the criteria for the card you want, you can improve your profile and get preapproved again. Go here to learn the mistakes you can make when applying for a credit card.
Here are things issuers look for when approving clients for different tiers of credit cards.
Credit card providers want to see responsible financial behavior, clients who manage their debt well. Your credit profile's payment history is critical when deciding whether to approve you for a new credit card. An issuer's priority is to ensure that the balance will be repaid.
If you have a poor history of late pays, defaults, or collections, and want to make improvement in order to be approved for a better credit card than what your preapproval allowed, you'll need to clean up the debt. This means paying the collections and defaults and becoming consistent and on time with other debt.
It can take time for providers to find you to be a reasonable risk; a few months before they'll be willing to take a chance. Even then, you might not get the card you prefer; instead, you will receive a limited card.
Credit utilization, or the percentage of credit being used, can lower your credit score if it's too high. You'll want to bring this down to improve your score and be viewed as less of a risk to the card provider. It's one of the primary elements the issuer will consider when qualifying you for a card.
The objective is to determine how much debt you have and exactly where you're spending money each month. Once you have an outline, you can develop a practical budget to start paying down and, over time, eliminating the debt. This will gradually reduce the credit utilization ratio.
When the ratio goes down, the credit score will improve, and you'll be eligible for the best credit cards at more favorable interest rates.
Card issuers look at the number of inquiries on your credit profile. It's important to avoid having too many hard credit pulls, which can not only reduce your credit score but also suggest to the provider that you're too great of a risk to qualify for the best credit card.
In fact, many card providers could decide they would rather avoid taking a chance at all to offer a card to someone with this history.
The objective is to preapprove with as many credit cards as you want to see if you qualify for and then move forward with a formal application when you narrow down which is the best of these. With preapproval, the provider will do a soft credit pull, which doesn't affect your credit score like a hard pull.
Before making a formal application, ensure the card fits your needs and lifestyle and that you feel confident you'll get approved. Preapproval is not a guarantee of approval.
Everyone wants a premium credit card with the best benefits and perks, but it sounds easier than it can sometimes be. In some cases, starting with a secured card and working your way to the top is required, and in some cases, you need to make some improvements to your profile and score to be eligible.
In other situations, you might be trying too hard to get a card, applying too many times, causing the issuers to see you as too great of a risk. It can be a slippery slope, but the best way to approach finding the card that fits your circumstances is to get preapproved and move forward from that point.
