What are the Chances of Your Approval for a Credit Card?
No matter if you are a seasoned cardholder or are going to apply for credit cards for the first time, you must be careful while choosing a suitable card and consider how to add up to your chances of getting an approval for the same.
The chances of you getting a credit card approval are dependent upon your credit score. You must also meet the eligibility criteria as determined by the concerned bank.
Every credit card is not created the same. Each one of them comes with a different purpose. These purposes can be rewards, balance transfer, travel, and many more, all attracting the applicants with varying requirements and credit profiles.
For those who don’t know, a credit profile is the summary of an individual’s credit history. The potential lenders such as banks, financial institutions, and credit card providers use this summary for determining the credit worthiness of the applicants.
Even the utility companies and landlords use this for determining your capability of paying back your bills. Your credit profile will also help you in estimating the probability of your credit card application being approved.
Here are a few tips to keep in mind while applying for a credit card in the UAE.
Tip #1: Going through your Credit History
Your credit history includes all of your debts like home mortgages, credit cards, and your accounts at departmental stores, and is a part of your credit profile. You can get a copy of your credit report from the credit reporting agencies in the UAE.
You need to go through your credit history properly before you apply for credit cards. In case you have any other debts, the credit card providers will check the following factors-
- Total number of accounts
- Average duration of all the open accounts
- Late payments charged
- Negative or derogatory marks
- Credit utilization
- Hard inquires on the credit report
You must ensure that there aren’t any mistakes or errors on your credit report. Everything should be accurate when the concerned credit card provider goes through your credit history.
Check for bankruptcies and foreclosures as well as collection accounts or judgements (if any). In case you hold other credit cards too, then make sure you are not carrying a balance that goes beyond 30% of the credit limit. If your credit history has any errors, report a dispute with the concerned company instantly.
Tip #2: Obtaining your Credit Score
If you plan to apply for credit cards, you must already know what a credit score is. If you don’t- it is a 3-digit score assigned to a person that acts as a major factor in determining his or her eligibility for a credit card or loan.
In the UAE, AECB or Al Etihad Credit Bureau provides your credit report that includes your credit score. A credit score may range between 300 and 900. The higher your credit score, the more is the probability of getting an approval on your credit card application. However, this is still the probability of approval, not a guarantee. There are other factors also that are taken into consideration such as minimum salary, age, residency, and employment.
Generally, a credit score of 700 and more is considered to be a good score. If the score goes below 700, then the person will have to work on improving it.
Tip #3: Don’t Rush into a Decision
The key to getting an ideal credit card is taking it slow. You should apply for each credit card that you come across. This will reduce your chances of getting the credit card approval.
You may get rejected for some of the cards you applied for, and end up hurting your credit score and the chances of approval for the other cards.
Tip #4: Select a Suitable Credit Card
First of all, determine your objective in applying for a credit card. Then, you need to ensure that it compliments your credit profile. For instance, suppose you are a student who is working for a minimum-wage part-time job and studying in a college. In such a situation, you may not be able to get approval for a travel credit card.
Go through the entire credit card application and make sure your credit score remains in alignment with the eligibility requirements and level of your income. The more your profile matches the eligibility requirements, the more are your chances of getting an approval on your application.
Tip #5: Showing All Sources of Income
Most of the credit card providers look for net annual income on credit card applications. This net annual income and your credit score- both have equal importance while applying for a credit card. The minimum income factor is important for the provider to as it shows your capability of meeting the obligation of monthly debts.
In case you have other income sources, you do not have to list only your salary or your hourly wages. You may also involve spousal support, investment income, and royalty income that you receive for making it clear that you can repay your debts. The provider may ask you to submit certain documentation as proof of your income.
Tip #6: Keeping your Debts Minimum
You must try to maintain as lower debts as you can on your credit report while applying for a credit card. This will increase the probability of your credit card application getting approved.
It is necessary to clear all the long-term debts, which you are able to. You can also reduce the short-term debts on your report by clearing your card balance before the closing of the statement.
To Sum Up!
For any reason, if your application gets rejected, do not give up. You can increase the chances of getting approval for a credit card by trying to make your credit score better and maintaining your net annual income. Make sure that you have selected the right kind of credit card that suits all your needs.