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Key takeaways
- Knowing your credit score and maintaining a low credit utilization ratio can greatly increase your chance of approval for a credit card.
- You’ll find many cards designed for different credit score ranges. Narrow down choices to those that you’re positioned to be approved for.
- Set yourself up for approval success by keeping your credit utilization and debt-to-income ratio within healthy ranges.
- If preapproval is an option, it’s a useful tool for understanding your approval odds before applying.
Whether you’re applying for your first credit card or looking to add another to your wallet, you’ll want to find a card that matches your spending habits and financial goals. You’ll also want to understand the likelihood of approval for that new card. We break down 10 tips that can help you improve your chances of getting your credit card application approved.
1. Check your credit score
Before you apply for a new card, know your credit score. Many credit card issuers offer free access to credit scores, if you’re a cardholder. So, calling the customer support number on the back of an existing card is a good first step.
Your three-digit credit score provides issuers a quick indication as to your ability to responsibly handle credit. Knowing your score can help you narrow down your new card search to only those you’re likely to be approved for, avoiding the hard pull — and subsequent dip to your score — that comes with applying for new credit.
2. Keep your credit utilization low
Credit utilization is the amount of credit you’re using divided by the total credit you’re approved for —in short, it tells future lenders the total amount of credit you’re using. Your credit utilization ratio is an important factor in your credit score calculation. Lenders prefer a credit utilization ratio of 30% or less, which indicates you’re managing credit responsibly and not overextending yourself financially. Keeping your credit utilization ratio low can improve your credit score — and increase your chances of credit card approval.
3. Correct errors on your credit report
Correcting errors on your credit report is a crucial step in improving your chances of credit card approval. A recent study from the Federal Trade Commission found 26 percent of participants spotted errors on at least one of their credit reports.
To ensure your report accurately showcases your financial health, start by ordering your free credit report from each of the three major credit reporting bureaus — Equifax, Experian and TransUnion. Once received, carefully review each section for errors or inaccuracies that can significantly affect your chances of card approval, including:
- Incorrect account balances
- Negative marks that are older than seven years
- Incorrect credit limits
- Bills reported as late or delinquent on accounts in good standing
You can dispute errors on your credit report with the credit reporting company and the creditor or lender behind the error with a detailed letter explaining what you believe is incorrect and supporting documentation. Among consumer credit protections, the Fair Credit Reporting Act requires credit bureaus to investigate and resolve a dispute within 30 days, with some investigations allowed up to 45 days.
4. Apply for credit cards that fit your credit score
It may sound obvious, but comparing only those credit cards that fit your credit score can increase your chances of approval. Different cards are designed for different credit score ranges, and applying for a card that matches your credit score makes sense.
When deciding whether to approve new cardholders, card issuers rely on the FICO score, which ranks your creditworthiness on a scale of 300 to 850 across five categories:
- 800 to 850 — Exceptional
- 740 to 799 — Very good
- 670 to 739 — Good
- 580 to 669 — Fair
- 300 to 579 — Poor
Those with very good to exceptional credit are eligible for premium credit cards with top rewards, including best-in-class interest rates and extensive benefits. Those with good credit can access a wide array of credit cards that offer attractive rewards without high annual fees.
If you have poor or fair credit, you still have options. The best cards for fair credit charge no annual fees and come with credit-building features, while the best cards for those with poor credit minimize fees and offer the opportunity to graduate to stronger cards with responsible use.
5. Look for cards with preapproval
Getting preapproved for a card gives you an idea of your chances of approval before you apply. Preapproval typically requires only a soft credit inquiry, which does not affect your credit score.
If you’re preapproved, it means you have a high likelihood of approval for the card if you decide to apply. However, preapproval does not guarantee approval. You’ll still need to submit a formal application, after which the issuer will conduct a hard credit inquiry when deciding whether to extend credit to you.
6. Pay your on bills on time
Your payment history accounts for 35 percent of your overall credit score, and it’s among the factors issuers weigh heavily when deciding whether to approve you for a credit card.
Paying your bills on time is the best thing you can do for your credit score. Missed payments aren’t typically reported to the credit bureaus unless they are at least 30 days late. But even one missed payment can cause your credit score to drop significantly.
If you have trouble keeping up with your due dates, consider setting up autopay to eliminate the manual task of paying your bills.
7. Maintain a diverse mix of credit
A diverse range of credit —commonly called your credit mix — also contributes to your overall creditworthiness. Your credit mix determines 10 percent of your credit score.
Credit mix is important, because demonstrating you can manage a variety of credit types reassures lenders that you can manage your finances successfully. Generally, diverse credit is made up of a mix of revolving lines of credit, like credit cards and home equity lines of credit, and also installment loans, such as auto loans, student loans and mortgages.
8. Note your debt-to-income ratio
Your debt-to-income ratio — or DTI — is a measure of your monthly debt payments compared to your gross monthly income. Lenders use your DTI to assess your ability to manage your current debts and any potential new debts, such as a new credit card. A lower DTI tells future creditors that you have a good balance of debt and income, suggesting that you can comfortably afford additional debt. On the other hand, a high DTI could signal that you’re overextended and might struggle to manage additional debt.
Calculate your DTI with our debt-to-income ratio calculator for an idea of what a potential creditor might see before applying for a new card.
What to do if your credit card application is denied
If your credit card application isn’t successful, it’s important to understand why so that you can take steps to improve your chances after a denial.
Start by reviewing the reasons for denial provided by the card issuer. Next, request and review your credit report, carefully reading over it for errors or other inconsistencies. Consider calling the card issuer to ask for reconsideration, especially if you believe there was an error in their decision. If reconsideration is not successful or an option, take steps to improve your creditworthiness, such as committing to paying your bills on time and reducing your overall debt. After a period of time, you can reapply or apply for a different card that better fits your credit profile.
The bottom line
You have several ways to improve your chances of credit card approval before you submit your application. These include regularly checking your credit reports and scores to understand your credit profile, paying your bills on time to maintain a good payment history and keeping your credit utilization low. When applying for a new card, make sure your likelihood of approval is high. If you’re denied, take steps to re-evaluate your credit profile and address any issues before reapplying.
