Applying for credit cards can be a mysterious process – is it possible to know if you’ll be approved for a card before you apply for it?
In many cases, if you have good credit and an income, you can know that you’ll be approved for most average credit cards. Elite credit cards have some stricter requirements, however, and will generally require higher incomes.
If you have poor credit there are also cards designed for you: secured credit cards, which require a security deposit and will help you build up your credit.
Learn more of the benefits that come from using credit cards responsibly in our Q&A video with credit expert John Ulzheimer.
Hi. My name is John Ulzheimer, and I’m credit expert who contributes to CreditCardInsider.com. If you’ve got any questions for us then please submit them in the comments section below and we’ll address them as quickly as possible. Today’s question is this…
How will I know whether or not I will be approved for a credit card? What factors go into the credit card approval process?
Excellent question. There’s a lot of moving parts to this. When you apply for a credit card, first off, the type of credit card you apply for is going to largely dictate what type of information they’re going to look at in order to determining their decision as to whether or not they want to approve you or deny you.
For example, you’re applying for a basic credit card. You know, a $10,000 credit limit, kind of a garden-variety credit card. Then it’s very likely that the decision is going to be based almost entirely on your credit report and your credit score, and really nothing other than those 2 pieces of information.
However if you’re applying for what you would consider to be the “apex predator”, if you will, in the credit card world. Something with a really high credit limit, $40,000, $50,000, excellent terms, something that’s really reserved for what people refer to as the “credit elite” then your decision is going to be based on a variety of other metrics.
So first and foremost, they’re absolutely gonna pull credit report. They are absolutely going to pull a credit score. However, most of the larger credit card issuers will then take that information and then feed it into their own custom developed credit scoring systems.
So they’ll actually use your score within their score. And I realize it’s kinda hard to imagine. That if you’ve got a really excellent credit score, and it’s then actually going to yield a really excellent credit score in their system as well.
These are referred to as custom application scores or application processing scores. And essentially they’re taking the information not only from your credit report, but information from the application, such as how long you’ve lived at the same address the presence of a checking or savings account, how long you’ve worked in the same industry, how long you’ve been on the job.
And they’re going to take these types of things that are not on your traditional credit report, and kind of use the aggregate of those pieces of information to determine their decision to approve or deny. They’re also going to consider your income. For a relatively low credit limit card, they are considering your income, because they’re required to by law. However it’s not the determining factor.
So someone who’s applying for kind of a garden-variety card, you really don’t have to have this incredible income to qualify for it. However, if you’re asking for something that’s very atypical, like a card with either a six-figure credit limit or something in that arena, then it’s very likely they’re going to ask you for some sort of proof of income.
And that can mean, pay stubs, tax related information, deposit related documents from your bank, something that indicates to them the type of money that you make and the type of money you bring in every single month. That’s very unusual.
And it’s very likely that almost every single person watching this right now, will never have to go through anything like that, because frankly you don’t need an $80,000 credit limit to function effectively. You can function effectively with a much lower credit limit.
And if you need larger amounts of available credit from plastic, then you can apply for multiple credit cards from multiple issuing banks, and kind of cobble together, if you will, a really large amount of buying power or buying capacity by doing so.
And you don’t have to go through these, kind of a typical underwriting processes. You’re not going to know if you’re going to be approved before you apply. There is nothing that says if you do this this and this, you’re guaranteed to be approved.
Generally speaking, if you’ve got good credit, good credit scores, and you have an income, you’re gonna be approved for something. And that something might be, just a classic credit card with a very low credit limit, or a credit card with a $20,000 or $30,000 credit limit and a 0% interest rate for 18 months.
It just depends on where you’re going to fall, kind of, in that range, if you will, of credit card offers. If you’ve got very poor credit, and very poor credit scores, you really shouldn’t waste your time applying for those really high level cards, because you’re simply not going to be approved.
You’re either going to be denied outright, or you’re going to be counter-offered something that’s much much less advantageous as far as terms go. So my best piece of advice is be realistic and reasonable.
If you’ve got good credit, expect a good response. If you’ve got poor credit, then I think you should brace yourself for something that’s not terribly attractive as far as the card that you would get if you were to be approved.
Are you interesting in learning more about using credit cards responsibly? Check out our learn section »
So if you have any other questions pertaining to credit or financial topics please submit them to CreditCardInsider.com or in the comments section below. Thanks a lot for watching! And have a nice day!