MANILA, Philippines – You badly want to have a credit card and you think you’re qualified to own one. So you go to your favorite bank and apply. What are the chances that your application will get approved?
Generally, issuing banks assess your credit history, and if you fail at some points, your application may be denied.
Here are some things to take note of to increase your chances of getting a credit card:
Pay off your debts
Banks use an affordability calculator when assessing your application and when assigning a credit limit. If you can, close down all other credit cards that left you a bad record and pay all loans acquired under your name. Any form of debt can affect your financial standing, so make sure to pay off your debt first if you can’t, trim them down at the very least.
Additionally, if you’ve had serious debt problems, for sure, you are going to have a difficult time to please your bank and prove that you won’t have the same problems you encountered with others.
Maintain a credit profile
Paying off your debt makes a great credit record, but don’t think that zero liability is good as well. If you haven’t had any debts or credit accounts yet, your potential lender would be clueless if you can actually maintain a credit line.
Start and maintain a good credit profile. Credit card issuing banks gauge the risk they have to take by loaning money to you, and assessing their profitability from interest rates, charges and fees that your spending behavior can incur.
Reduce your debt-to-income ratio
Bring your monthly debt payments to (at most) 12% of your income – the lower, the better. Your application will go through an underwriting process. The underwriter will assess if your credit application will be profitable to their bank and to you, the future cardholder. In the process, they will know how risky you are in terms of repayment.
Maintain a big savings account
If you have multiple accounts with equally big amounts of deposits, you’re good to go. But if you own multiple deposit accounts that vary in savings, make sure that you put large deposits in the bank where you’re applying for.
For example, if you apply for a credit card from Bank A, make sure that you have big savings in Bank A itself. This will serve as the bank’s reference when determining your financial capacity and when assessing the stability of your cash flow.
Don’t do follow-ups on banks
Doing follow-ups on your credit card application can suggest that you badly need credit or you were declined by several banks before. Upon submission of all documentary requirements, just wait for them to conduct verification and credit investigation. The turnaround time is usually two weeks for most banks, so if it hasn’t been longer than that, hold yourself before making your calls. – Rappler.com
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