Excellent Credit, Not a Guarantee You’ll Get a Credit Card
Having excellent credit is a desire that many people like to achieve. Of course, excellent credit may be a good thing to have but you need to know that it is just a means to an end and not an end in itself. If you want to apply for a credit card, your credit is just one of the factors that credit card companies will consider. If your credit is bad, you may have trouble getting for application approved. At best, you will get a card at a very high interest rate. But with excellent credit, you may be able to get a credit card at a lower rate.
What is an Excellent Credit Score?
Going by the FICO Score, you are said to have an excellent credit score if your score is 800 and above. An excellent credit score is not a feat that one can achieve overnight. It can take several years to have an excellent credit score. You need to have built good credit history over time with a good mix of credit accounts. You should always keep your credit utilization below thirty per cent, avoid too many enquiries on your credit among other things.
But before you start chasing excellent credit, or may be, you have already attained the status, you should understand that it is not a guarantee that your application for a credit card will be approved. Does it sound strange to you? You actually heard me correctly. Excellent credit does not guarantee that your application for credit card will not be declined. Before you start arguing, let me explain why. Below are some of the reasons why your credit card application may not be approved despite your excellent credit.
Low income: Your credit score will not reveal your income level. If you don’t earn sufficient income or your income is irregular, credit card companies will most likely decline your application. The fear is that, you may not be able to consistently pay back your credit at the end of the month. Even at times, with a high income, your credit card application may still not be approved. This can happen if you have just secured a job and you have not stayed long enough on the job. The best you can do in this instance is to wait for some time before you apply for a credit card.
Debt: Credit card is actually a revolving debt. Although you may not need to pay the entire card balance at the end of each month, you have the obligation, at least, to make a minimum payment at the end of the month. If you already have a pile of debts that you are servicing, adding another debt may bring too much pressure on you. This may lead to inability to meet up your obligations on the debts. Before you know it, you will start to miss payments. Credit card companies don’t want this kind of situation. Approving a new credit card will increase their risk exposures and they may not want to take such risk.
Many Credit Cards: There are some people who don’t know how to decline credit card offer. The fact that you are offered a reward credit card does not mean that you should jump at it. Each additional card you have puts more pressure on your overall credit limit. With too many credit cards, you may not be able to get a new one except you close one or more of your existing cards. However, you need to do this carefully so that it doesn’t hurt your credit score.
Read Also: How to close credit card in proper way
Multiple credit card applications: Comparing offers before applying for a credit card will help you find the right card for your needs, and also ensure that you’re not paying higher fees or interest rates than you have to. But in a bid to get cheap or low interest rates, you may be hurting your credit without knowing. Each time you shop for a credit card, a check is carried out on your credit. This is a hard inquiry and it will lower your credit by a few points. So, if you apply for multiple credit cards within a short timeframe, the cumulative of drops in your credit score can become significant. Besides, credit card companies may interpret it to mean that you are very desperate for credit. If you are shopping for a new credit card, it is suggested that you do this within a short period. This can make your applications to be seen as just one application. If you extend your credit card shopping beyond a reasonable period, it could be misinterpreted to mean that you are shopping for different cards. If your application for credit card is rejected, there is tendency for you to continue to apply until your application is approved. That is not a good approach. It may be safer to wait for another six months before you make a new application.
New credit card: If you’ve just got a new credit card, you may not have enough credit history on the card that can justify that you are credit worthy. Having insufficient information about your credit history may make your application not to be approved. Don’t forget that it is possible that you build your existing credit score through other means apart from credit card. Possibly you had a student loan.
Credit freeze: Do you know that you can prevent credit card fraud by freezing your credit? If you freeze your credit, it becomes impossible to access your credit. However, the disadvantage is that, when you or other people/organizations want to genuinely access your credit, they will not be able to do this either except you unfreeze the card again. Since credit card companies will like to place inquiry on your credit before your application for a card can be approved, inability to access your credit means that your application will be declined.
Read Also: Credit Cards Application and How to Choose the Right One
Default: Credit card companies frown at default cases. If you had had a default case with a credit card company and you now want to get another credit card from the same credit card provider, they may be reluctant to approve the application.