Due to the global pandemic and the financial crisis that comes along with it, some credit card issuers are tightening approval standards. Here are some tips that will boost your chances.
Coronavirus is taking a financial toll and unemployment levels are at unprecedented levels. With banks letting customers defer payments on credit cards, it isn’t surprising that lenders are tightening approval standards.
If you are trying to apply for a credit card, here are some things that can help you boost your chances of getting approval:
Pay down debt you already have
Even if this is difficult right now, paying off your debt will help you qualify. Keep in mind that one of the most important factors of your FICO score is how much debt you owe in relation to your credit limits.
Ideally, the credit utilization rate should be below 30%, which means that if your credit limit is $10,000, your debt should be $3,000 or less.
Don’t close old accounts
Another important factor of your credit score is the average length of your credit history. Closing old cards with zero balance could lower your score, as you won’t have so much credit limit available. To make sure your oldest lines of credit are helping you, keep them open even if you no longer use them.
If you are paying an annual fee for a card you no longer use, instead of closing the account, contact the credit card issuer to see if they have an option with no annual fee that you can downgrade to.
Make all your payments early
This is probably the most important factor in your credit score. Keep in mind that you need to make early payments and that this does not only apply to credit cards, but also to loans, mortgages, utility bills, or rent payment.
A single late payment could cost you 90 to 110 points off your score. That is a lot of damage for one single time you forget a payment. Make sure you don’t miss any!