Like the location of Genghis Khan’s tomb, the precise formula for guaranteed credit card approval is a bit of a mystery. After all, credit scoring companies like FICO and VantageScore don’t share the details of their secret formulas. If you’re concerned that your credit score may be too low for one of the top credit cards, the best we can do is look closely at consumers routinely approved for credit and dissect what they’re doing right.
While none of these steps guarantees that you’ll be approved for a credit card the next time you apply, evidence indicates that they’ll certainly improve your odds.
1. Review your credit report(s)
It’s up to you to ensure that all the information in your reports is correct. Your credit reports are essential because the three major reporting agencies — TransUnion, Equifax, and Experian — supply the information FICO and VantageScore use to assign your credit score.
Order a copy of all three reports for free from AnnualCreditReport.com, and go over each line by line. If you find any errors, circle them and file a dispute with the reporting agency. By law, the reporting agencies have 30 days to investigate and resolve your dispute.
2. Build a credit history
If you don’t have much in the way of a credit history, here are a few ways to improve the situation.
Sign on as an authorized user
This involves asking someone with a strong credit score to add you as an authorized user to one of their credit accounts. Whoever you ask is going to need to know you well and feel confident that you would never do anything to harm their credit.
Here’s the truth: If someone does add you to a credit account, you never even have to use the card to improve your credit standing. Each time they make on-time payments, you both get good marks with the credit reporting agencies.
Apply for a secured credit card
A secured credit card has less stringent requirements than unsecured credit cards and is typically easier to qualify for. Usually, a secured credit card issuer requires you to put down a refundable security deposit before it will issue you a card.
The amount of your deposit determines your credit limit. Let’s say you put $250 down. Your total credit limit will also be $250.
As long as the credit card issuer regularly reports to the credit reporting agencies, each monthly payment helps you build a positive credit history. You may eventually be able to “graduate” to an unsecured credit card and get your security deposit back, too.
Use a cosigner
A cosigner signs your credit card application and promises to be responsible for the payments if you fail to make them. Again, you’ll want to ask someone with a strong credit score who knows you well enough to believe you’ll make all payments as promised. In the event you don’t, not only will your credit score be damaged, but so will your cosigner’s.
3. Get rid of excess debt
It’s not just credit card companies that are interested in how much debt you carry. All creditors want to know how much you owe in relation to how much you earn.
If you’ve had trouble with credit card approval in the past, it may be because you had too many other outstanding debts. Each of those debts represents an obligation, and the more obligations you carry, the more a company worries about what you’ll do if you become ill or lose your job.
Paying down debt may seem daunting, but the good news is that you only have to do it a little at a time. The lower your debt, the higher your credit score is likely to be.
4. Prepare to provide evidence of income
In short, credit card companies want to know that you can afford to make credit card payments. Provided you already have a history of paying bills on time, they need a little assurance that you’re not getting in over your head. If you’re not sure how to provide your income, here are some forms of documentation that may do the job:
- Pay stubs
- Job offer letter
- W-2s
- Income tax returns
- Unemployment benefits letter
- Investment returns statement
- Rental property income
- Child support you receive
- Alimony payments you receive
- Trust fund payout statement
- Documentation of inheritances
- Social Security payments
- Pension payment
- Retirement distribution statement
- Public assistance letter
5. Open a bank account and sign up for direct deposit
Some banks — like Chase — look fondly on credit card applicants who’ve opened an account at their bank and signed up for direct deposit. Once you’re a customer, your financial institution can check your bank account to learn more about how you handle finances. For example, it can see how much money you have coming in each month and how much is going back out.
If you are considering opening an account, you may want to consider credit unions. Because credit unions are member-owned, they tend to have less stringent rules for who qualifies for loans and credit cards.
Finally, look for a prequalification tool on a credit card issuer’s website before proceeding with any card application. During the prequalification process, a bank or credit card issuer will conduct a “soft credit check.” Unlike a “hard credit check,” a soft credit check does not ding your credit score.
Once told that you have successfully prequalified, that’s a very good sign that you’ll also qualify once a full credit card application has been submitted. Once you have a credit card in hand, you’re on your way to building a more robust credit report and higher credit score.