Thinking about getting a new plastic card? Whether it’s your first time or not, here are the things to avoid if you want to ace your credit card application.
Applying for multiple credit cards at once
For some, multiple credit inquiries may mean looking out for the best deal, but what they don’t know is that multiple applications can actually pull your credit score down. It may start to raise a red flag, as the lender may think you’ve opened accounts in all those places or that you’ve applied to all of them and got denied for some reason.
Letting your credit score go down
Unlike before, credit companies are more wary now of accepting low-credit score applicants. Since it is impossible to know the credit score requirement of each company, make sure you maintain your score in tip-top shape. If your score is within the low or mid-level range, it would be wise to postpone your credit application until it improves or try applying for a secure credit card instead to boost your score for the meantime.
Missing your due dates
Your past payment history makes up the most of your credit score at 35%. Not only missed payments can drag your credit score down, but you can also suffer very expensive interest rates.
Canceling your other cards
Closing your accounts can result in a lower credit score because of two reasons. First, closing your older credit cards will shorten your length of credit history, which makes up 15% of your credit score. Second, it can reduce your available credit, which affects your credit utilization ratio.
Failing to review your credit report for errors
Something as simple as a misspelled name can hurt your credit score without you knowing it. You may think that you’ve been diligent in paying your bills on time. However, if you have a too common name for example, there could be entries in your credit report that actually belong to someone else which could drag your credit score down. Even if you’re not applying for new lines of credit, you should check your credit score often.
Cosigning for someone with bad credit
Becoming a cosigner means you are taking responsibility for the other person’s actions, and if he doesn’t pay, you will. The problem with this is that the lender will typically contact you only if the other person is 90 days late with his payments, and this could significantly hurt your credit score. To avoid this problem, make sure the bills are mailed to you whenever you cosign for someone so that you can monitor if they are making payments.
Changing your occupations frequently
Although your employment background should not directly affect your credit card application during electronic processing, moving around every so often can raise a red flag during human verifications. Frequent job changes may raise questions regarding your income stability, which the lender may see as something that could affect your repayment ability.