Due to the unprecedented COVID-19, thousands of people have either endured a reduction in their income or been unemployed. In such times, banks and credit card companies are tightening up card approval criteria for their customers. They are reducing credit limits without even notifying the customers. When you apply for a credit card during the recent pandemic, the chances of getting approved for a credit card are quite low. Unless, of course, you have a high repayment capacity.
If you are wondering how to improve your chances of approval for your credit card application, meet your credit card issuer’s eligibility criteria and other tightened requirements. Here are the top tips on how to maximize your chances of getting approved for a credit card:
- Make on-time credit card payments
One of the crucial factors that add to your credit card is your payment history. Keeping this in mind, you should pay your credit card bills on time and in full. This rule applies to credit cards and other loans. When you make your credit card payments on time, it reflects positively on your credit score, and having a high credit score enables you to secure both loans and high rewards credit cards in the future.
It is worth noting that if you default on your credit card payments, you will have to incur interest charges and other penalties. It will also reduce your credit score. Credit issuers do not approve credit card applicants who have missed payments in the past. So, if you want to increase your chances of getting approved for a credit card, ensure on-time repayments of your outstanding balance.
- Pay off the debt you already have
Another factor that is a crucial part of your credit score calculation is the amount of debt you own. Before approving your credit card application, your issuing bank or the credit card company will run a verification check to determine if you have any current financial obligations. Having a debt to pay when you apply for a credit card may not get your approval.
So, you need to pay off the debt you already have and then apply for a credit card. Since your credit utilization ratio directly impacts your credit score, try to keep it below 30%. Having a high credit utilization ratio reduces your chances of getting approved for a credit card, especially during the COVID-19 pandemic.
- Keep your old account active
The average length of your credit history forms an integral part of your CIBIL score. Having credit card accounts that you no longer use may lengthen your credit history and improve your credit score. So, if you close your old credit cards with zero balance, it will significantly harm your credit rating.
A golden piece of advice would be to keep your gold credit cards and lines of credit open while applying for a credit card. If your old cards are no longer in use, you can always keep them in your storage drawer, but never close them. If those credit cards have an annual fee, contact your credit issuer and see if you can get no-annual free credit cards instead of just closing your accounts.
- Maintain employment
Your employment is an integral part of your credit card application. When you apply for a credit card, your credit card issuer will want to know your employment situation to determine repayment capacity. You must convince your credit card issuer that you can repay your credit card bills on time and in full. Maintaining employment during the COVID-19 pandemic improves your chances of getting approved for a credit card.
- Check your credit score
Before you apply for a credit card, it is imperative to check your credit report and monitor it for changes. You can check your credit report for free on the Credit Bureau’s website. Monitor your credit rating for changes as you make moves to improve your credit score.
Also, if you find discrepancies in your credit report, immediately raise a dispute with the Credit Bureau and rectify those mistakes. This way, you can improve your credit score. If you wish to improve your chances of getting a credit card during the pandemic, you must maintain a minimum CIBIL score of 750.
- Opt for a secured credit card
If your credit card score is not in the best shape, and you are worried about being approved for a credit card, you can choose to apply for a secured credit card. You will need to deposit a certain amount of cash as collateral. It allows you to build your credit score, and when you have a high credit rating, you can apply for a credit card that comes with maximum rewards and other benefits.