Are you looking to obtain a credit card? Then make sure you understand the eligibility criteria, as it could prove immensely helpful in making your application successful. In this clear credit article we will dive into what would be necessary to secure a credit card and how your credit score affects its approval.
What factors are considered?
When applying for a credit card, various financial institutes will evaluate your credentials based on certain criteria. Few of the vital factors that may be considered by such companies include:
- Age & residency – To obtain a credit card in Australia, you must be 18 years or older and an Australian citizen or permanent resident. But don’t worry if that’s not the case – there are still some credit cards available to temporary residents as well!
- Annual income – Always confirm that your annual income meets the minimum requirement for any credit card you apply for – it’s an essential step! Certain premium credit cards that offer attractive reward programs and points tend to require higher annual incomes than the more standard cards.
What about your credit score?
Your credit score plays a critical role in the lending process, as it helps lenders determine the level of risk associated with offering you money or other credit products. Building good credit is something achieved through responsible borrowing and timely repayment on loans and bills; however, if your record has any missed payments or defaults listed, then unfortunately your chances for obtaining favorable terms are limited. Checking out your own credit score at no cost can provide more insight into how potential creditors view you.
Your credit score may not be the only factor in your credit card application, but it is important to keep in mind that a low score could keep you from being accepted for higher available limits.
What if you already have a credit card?
Having several credit cards or a higher spending limit could put you in financial trouble if your income, expenses and other monetary concerns are not taken into account. This increases the chance of missing payments and ultimately damaging your credit score. Before taking on more debt than you can comfortably afford to pay back, assess all factors carefully for a secure future.
If you rush to apply for several credit cards at once, it can have a negative effect on your credit score. As multiple lenders check your financial history when processing applications, this gets reflected in your file and may indicate that you are desperate or having difficulties managing money properly-resulting in rejection of the request as well as lower credit ratings.
What if you are declined a credit card?
A bad credit history can make it difficult to get approved for a credit card and could be the reason for your application be declined. However, there are a number of steps you can take to improve your chances of approval. As well as multiple reasons you are unable to obtain a credit card.
The first thing you should do is get a copy of your credit report from the major credit reporting bodies in Australia. This is so that you can assess what may be causing the decline as well as arming you with your credit information for future reference. If you need assistance reading your credit report or you discover something that needs to be fixed, companies like us at Clear Credit Solutions specialise in helping our clients fix bad credit.
