Q: Whats The Best Debt
A: Your debt-to-income ratio or DTI is going to show lenders what sort of shape youre in should any changes to your income occur. It is how much debt you have vs. how much money you make. If its too high, youre going to have a lot of trouble paying your debts down if anything out of the ordinary happens to your money. In order to look good to lenders and keep your credit score decent, you want to keep your DTI to below 40%, and as low as you can go from there.
Ordering Your Credit Report By Phone Or Mail
If you prefer not to order your credit report online, you can order your credit report over the phone by calling 888-EXPERIAN . If the information provided matches the information on record, your credit report will be mailed to you. If you were unable to successfully complete the identification verification, you will need to provide the requested documentation or wait 30 days before requesting your report again.
Experian takes the privacy and the security of your information very seriously. For this reason, if your identity is unable to be verified over the phone, you will be provided instructions for mailing in your request, just as with an internet request. If you suspect that you have been the victim of fraud, you should include that information when sending in your written request.
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Decrease Your Credit Utilisation Ratio
Its not just your credit rating thats under the microscope when you apply for a credit card. Your credit utilisation ratio will also be assessed. What is a credit utilisation ratio? This is basically how much credit you have available to you, in relation to how much credit you have used.
To calculate your ratio, divide the total current balances on your cards by their total limits. So, if you have two credit cards, each with a limit of $5,000, and you have a balance of $4,000 on both, your ratio is $8,000/$10,000 = 80%.
As a healthy ratio is generally thought to be around 30%, your ratio of 80% suggests you are currently struggling to repay your credit card balances. Potential credit card providers could see this as a red flag, and may choose not to approve any new credit applications in your name.
Before applying for a credit card, it can be a good idea to reduce your credit utilisation ratio as much as possible by paying down your balances.
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Find Out If You Prequalify For A Card
If you prequalify for a credit card, this usually means your credit score and other financial information matches some of the initial eligibility criteria to open a card. Getting prequalified doesn’t guarantee an approval but it does improve your chances. Most prequalification offers will appear in your online or mobile banking, or you might get a letter in the mail. To learn more about whether or not you prequalify for a card, call us anytime at .
If Youve Applied For Credit Cards Before
Applying for too many cards or regularly switching cards can affect your credit rating. Each time you make an application its recorded on your credit file. Your file will also show if an application is refused. When new providers check your credit file, it can look like you have lots of cards already or that no one else wants to lend to you.
If youre struggling to pay what you owe on a credit card, find out how to deal with the debt.
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What To Do If Your Application Is Denied
If you find that despite your efforts, your credit card application is denied, its not the end of the world. Its possible your application didnt go through for a number of reasons, like a low credit score, low income or negative credit history.
If youre unsure as to why your application was rejected, lenders are required to tell you why, due to the Fair Credit Reporting Act. This is called an adverse action notice, and it typically arrives seven to 10 days after your denied application.
If youve been denied multiple times, it wont hurt your credit score. However, multiple hard inquiries during the application process will knock your score down a few points. Before you apply for a new card, make sure you know the minimum requirements and why youve been rejected before, so you dont get hit with another hard inquiry and a denied application.
If you keep getting denied, go back to your initial research and look at what other options are on the table, like applying for a secured credit card to help build up your credit score.
When Should I Redeem Rewards On A Credit Card
Some programs have no expiration dates and you can earn and use rewards whenever its convenient for you. Others have annual programs with use it or lose it clauses requiring that you redeem rewards within a certain time period or else forfeit their value. Be sure to read your Credit Card Agreement to understand if and when rewards expire.
Looking for more answers? Browse our Resource Center by topic to learn more about everything credit, from applying for a new card to making the most of your buying power.
Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.
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Q What Happens If I Cant Keep Up With My Repayments
If you are late or miss a payment altogether, youll be charged a fee and the late or missed payment will be noted on your credit report, which could affect your ability to get credit in the future.
If your card has a 0% offer, this is also likely to be withdrawn and youll start paying interest on your balance.
If youre concerned about meeting your repayments, its best to talk to your lender as soon as possible as your lender may be able to come to an arrangement with you to help repay your debts.
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We believe everyone should be able to make financial decisions with confidence. And while our site doesnt feature every company or financial product available on the market, were proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward and free.
So how do we make money? Our partners compensate us. This may influence which products we review and write about , but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.Here is a list of our partners.
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Whats Your Businesss Legal Name & Contact Info
As with a personal credit card, a business credit card application will include fields for your legal business name, the applicants name, and the address and phone number of the business.
If you are applying as sole proprietor or part of a general partnership, you can use your name as the legal name however, LLCs, S-Corps, etc. will be required to list the legal name of the entity.
How To Answer Credit Card Application Questions
14th Feb 2017
Applying for a credit card for the first time can seem like a difficult task, especially if you donât know what questions will come up on the application. You might think that youâll need to know lots of details about your life and if you get anything wrong, it will just reject you.
But thereâs nothing to worry about â you just need to put in some basic information about you and your finances. Weâll take you through the kinds of questions that credit card applications will ask you so know what to expect and you donât need to stress.
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Have A Repayment Strategy
Having a credit card comes with the responsibility of making payments. Making late payments or minimum payments opens you up to interest charges and fees, in addition to potentially hurting your credit score. For that reason, the best way to pay your credit card bill is on time and in full.
Before you apply, make sure you have included your credit card payments in your budget. Lastly, check to see if the credit card you are applying for allows for autopay to help streamline the payment process.
Try To Fix The Problem
If your credit score is low, take a few months to build it up. Use your credit card responsibly, make your payments on time and try to pay off the entire balance each month so youre not charged interest. Good credit habits will help you get approved on your next application. Plus, make sure you meet the eligibility requirements like youre the age of majority and your income meets the threshold.
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You May Find Out You’re Approved Right Away
If you’re applying for a credit card online, over the phone, or in person and you’ve given all the correct information, you can typically find out whether your credit card application is approved in 60 seconds or less.
When you make your credit card application online, make sure you use a secure web connection to prevent your details from being stolen.
Once you’ve submitted your online application, don’t press the back button or the submit button more than once. Otherwise, there could be issues with processing your application.
Once your approval is confirmed, you’ll also find out the you’ve been approved for, unless you’ve applied for a credit card with no preset spending limit. Then, in 7-10 business days, you’ll receive your credit card in the mail. Just call the number on the front of your card or create an online account to activate your credit card and you’re ready to start making purchases.
With some types of , you can use your credit card instantly. For example, if you’re approved for a retail store credit card, you’ll typically be able to use the account in the store and any sister stores the same day you’re approved. Some major credit card issuers give you access to your new credit card account right away with a temporary credit card or through the bank’s mobile app.
Who Is Your Current Employer
Lets take, for instance, that you are an employed individual. Banks need to know details about your employer like office address, nature of the business, company position, monthly compensation, and even telephone number. They would also want to know how long you have been employed and will let you state your date of employment.
In the case of self-employed individuals, you will bank representatives would like to know how long you have been running your business, the nature of your business, and other details that will prove your ownership and earnings.
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What Are The Types Of Information You Need On A Credit Card Application
Here are some details youll typically need to supply on a credit card application, whether filling it out online or by mail.
- How long youve lived at that address
- Whether you own or rent your home or have another type of living arrangement
- Country of citizenship
How Many Credit Cards Should I Have In Order To Build Credit
There is no right number of credit accounts to build a solid credit history. There are many factors that make up a credit score , but late or missed payments, frequency of , and your credit utilization ratio are all major factors. When youre starting out with credit, it can be safer to begin with one or two cards to ensure you can make payments consistently before adding more.
A more advanced move is to optimize your , possibly by adding cards or requesting higher limits. Your utilization ratio is the amount of total debt youre carrying compared to your total credit limits. If you can responsibly manage multiple lines of credit, you can lower your utilization ratio even if you may be carrying a balance on one or two cards.
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Think About Your Needs
Once you know what cards you might qualify for based on your credit score, its time to think about what your needs are for a credit card. Are you looking to earn cash back or earn travel rewards? Maybe building credit is your highest priority. There are lots of cards that will cater to each of these needs and more.
Each card also comes with its own terms and conditions, including fees and interest rates. Check to see if the card youre interested in has an annual fee and think about whether the annual fee would be worth it to you. Many rewards cards have an annual fee attached to them. Will you be able to earn enough rewards on your card to offset the fee?
Also, consider whether you will be carrying a balance on your card or if you will be paying off your purchases in full. If you plan to carry a balance, the interest rate on your card will have a big impact on your monthly payments. Youll want to look for cards with a low interest rate or cards that offer 0 percent intro APR for a limited period.Learn more: Tips on how to choose your next credit card
What Counts As Income On Your Credit Card Application
Youve filled out the rest of your application and are down to the final entry: your annual income. If you have a non-traditional income stream or several income streams, you may wonder what actually counts in this field.
The answer to your question actually depends on your age, thanks to the Credit Card Act. Heres how it breaks down.
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How Long It Takes To Get Approved For A Credit Card
There’s so much anticipation when you’re filling out a . From the moment you start filling in the application all the way up to when you click the submit button, you probably have three big questions going through your mind: Will I be approved? How much will my credit limit be? How soon will I find out whether I’m approved?
The amount of time it takes to get the answers to these questions depends mostly on how you submit your credit card application.
Why Is Income Considered As Part Of Your Credit Card Application
Prior to 2009, there were few laws regulating credit card issuers and how they approved applications. It was much easier to qualify for a credit card at that time because there was no requirement for credit card companies to ask for the credit card applicants income and they most often didnt.
While this may sound great , giving everyone a credit line came with consequences. The lax regulatory environment resulted in many people going into default or bankruptcy. And, of course, this ruined their credit scores.
That all changed with the . One of the new rules included in this legislation was that creditors must believe that you have the ability to repay your debt.
To figure this out, they added income as part of the information required on all applications. This helps the credit card issuer establish your ability to pay, particularly when weighed against the current level of debt listed on your credit report.
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How To Apply For A Credit Card Online
Determine your credit health. Before you shop around for credit cards, consider ordering a copy of your credit report to review your credit history and look for errors. You can get one free annual copy of your credit report from each of the three credit bureaus at annualcreditreport.com. Your credit scores are not included on these free credit reports so it is recommended to check other sources for your credit scores to help you identify which cards you’re eligible for.
Do your research. There are hundreds of different credit cards available with a variety of offers, fee structures and rewards programs. Chart your spending behaviors so you know which categories you spend most heavily in, and then shop around for the card that matches your credit profile and best fits your needs.
Pull together all of the required information. You won’t need a lot of personal information to apply for a credit card, but it’s important that all of your data is up-to-date and accurate.
Follow internet security best practices. When you’re ready to apply, make sure both your web browser and operating system are up to date. Consider filling out the application on a mobile data connection or a safe, private network to prevent the risks of someone intercepting your personal information. And if you have any doubt about the legitimacy of an email from a card issuer, navigate directly to the issuer’s website rather than clicking on any links in the email.
Choose The Right Credit Card
Picking the right credit card is the most important part of getting your application approved. If you don’t have good credit yet or you don’t have any credit history, then the best credit cards will be out of reach for now and it’d be a waste of time to apply for one.
So how can you figure out your credit card options? Here are a few tips:
- Look for cards intended for consumers in your credit range. If you have average credit, check out For bad credit, look at , and so on.
- Check with your bank or credit union. If your credit is a work in progress, it could be easier to get a credit card with your own bank. Since you have a history there, it may be more willing to issue you a card.
- See if you’re pre-qualified for any cards. Several credit card companies have tools you can use to see if you prequalify for any of their cards. While a pre-qualification isn’t a guaranteed approval, it does mean you have a good shot at getting that card.
For those who have had trouble getting approved in the past, secured credit cards are typically the safest bet.
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