How to Qualify for a Credit Card

  • 6 min read

Having a credit card may not be right for everyone, but it is a great way to have money available to you in emergency situations. When used responsibly, a credit card is a great way to build up a credit score, establish a good financial reputation, and even be able to get big ticket items when needed. Credit cards can be used online, are safer to carry than cash, and can help to protect your identity.

How does a person qualify for a credit card?

The primary way to qualify for a credit card is to have good credit because approval is based on your credit profile. Credit report and monitoring services like TransUnion Canada can be helpful. When you pay your bills on time, keep your debt to income ratio low, and have proven that you can pay off loans and lines of credit in a responsible way, then you’ll establish a good credit score. This score is used to qualify you for the new credit card that you want!

With good credit, you can often be approved for a new credit card even with plenty of open credit available to use already. This is particularly useful if there is a new rewards card, travel card, or a credit card with perks that helps to make your money go further. In order to qualify for most credit cards on a virtually automatic basis, you’ll need a credit score of at least 620, if not higher.

Secured Credit Cards Work For Lower Credit Scores

Maybe your credit score isn’t at 620 because you’ve never really had any credit before or you’ve encountered some payment difficulties on some of your accounts over time. It could even be because of a foreclosure, a bankruptcy, or a short sale of your home! As long as your credit score is above 500, you can often qualify for a secured credit card.

These cards are a little different from the traditional credit card because you must put down a credit deposit in order to get your line of credit. These credit cards often have higher interest rates and fees than other traditional credit cards, but higher interest rates come with lower credit scores because there is more risk to the lender. Make sure to find a secured credit card that will refund your deposit and report to all 3 major credit bureaus.

Is Your Credit Score Below 500?

If you have poor credit with a score below 500, it can be difficult to find a credit card for which you qualify. If this describes your financial situation, the best way to qualify for future credit is to pay off as much debt as you can over the next 12 months, work on increasing your income if possible, and remove as many negative events from your credit profile as possible.

Over time, a credit card can help you move toward having a great credit score. Use these tips to qualify for the right kind of credit card so that you can have the money you need available to you when you need it.

What To Do If Your Credit Card Application Is Denied

Getting a credit card can be an exciting time in life. You begin to think of all the places you can go, things you can get, and the financial security that you have with a line of credit.

Then when you get the letter in the mail that says your application was denied, all of those hopes come crumbling down.

Here’s what you need to do if your credit card application has been denied to prevent future denials.

Find Out Specifically Why You Were Denied

Almost every credit card denial letter contains the specific reasons as to why you were denied the line of credit you wanted. There are a wide variety of reasons why a lender would decide not to give you a credit card. It could be because you’ve never had any credit before. You might have been late on some credit card payments in the past. You might even have some delinquencies that are on your credit report that you don’t even know about!

Make Sure To Check Your Credit Report

When you get a denial, you can utilize that letter to get a copy of your credit report. Look over your report to make sure it is accurate. If it is inaccurate, then begin to take steps to correct that information. If it is accurate, then you can begin the process of repairing your credit so that you’re not denied the next time.

Did You Meet the Credit Card’s Minimum Qualifications?

Some credit cards have specific minimum qualifications that must be met in order to qualify for that line of credit. These can be income requirements, length of credit history requirements, or even job stability requirements.

If you apply for a card and don’t meet those minimums, you will be automatically denied. This may or may not be in your credit card denial letter. If your credit looks good and you were denied, then take a look at the card’s requirements in the fine print of the application to see if you missed something.

Your Credit History Can Be Bad, Even If You Don’t Think It Is

All it takes is one negative event on your credit history for a credit card lender to decide to deny your application. A late payment here or there happens to almost everyone, so those usually aren’t the reason for a denial unless there is a pattern or consistency to your late payments.

Having an account go to a collection agency, filing for a bankruptcy, or just having a lot of credit denials can all lead to your application being denied. If you think your credit is good, but you can’t get a credit card, you may wish to seek out someone who can give your credit a fresh look.

Find the Right Credit Card!

Don’t just jump at the first credit card you see that looks attractive. Different credit cards have different standards for approval and where one lender might tell you “No,” another lender might give you a very resounding “Yes!” Take the time to look at all of the cards that you believe may grant you a line of credit, compare them, and then apply only to the best one.

A credit card denial isn’t the end of the world. It’s information that you can use! Take that information, use these tips, and pretty soon you’ll find a credit card in the mail instead of a denial letter.

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Christopher - BSc, MBA

With over two decades of combined Big 5 Banking and Agency experience, Christopher launched Underbanked® to cut through the noise and complexity of financial information. Christopher has an MBA degree from McMaster University and BSc. from Western University in Canada.