Getting approved for a credit card

As the US economy struggles, banks are making it harder for consumers to get approved for credit cards and it is becoming harder to benefit from great balance transfer promotions that can help you save money.

Here are 5 tips to ensure that you get approved for that credit card with great rewards and a balance transfer offer.

1. Know your credit score and credit history

Being rejected for a credit card application is a scar on your credit history that takes years to recover from.  The best way to avoid this is to know your credit history and credit score so that you can only apply to credit cards and offers that you are likely to get approved for.

The best way to do this is to get your free credit history that federal law states you are privy to once a year.  But this credit history does not include your credit score which is what credit card issuers and banks use to determine your credit worthiness.

To get a free credit score and credit monitoring you can use GoFreeCredit 3-in-1

2. Use your existing credit cards wisely

Credit card issuers look closely at your current spending behavior to determine your creditworthiness.  It’s important to not use up all of your credit line as this shows that you are at risk of going overlimit and they question your ability to make large payments again your credit card debt.

For example, if your credit line on one card is $1,000 and you carry an average balance $900, you are considered 90% “utilized”.  This is high.  It will be better to spread the balance out over your other cards and carry a balance of $300 on three separate cards which makes your highest utilization 30%.  Much easier for a credit card issuer to swallow.

3. Close credit cards you do not use

We all have credit cards that we don’t use, I am at guilt of this as well. Credit card companies see this as a risk and your total “exposure” or total credit limit will be higher and they won’t want to increase that by giving you another credit card.

It is also true that closing credit cards temporarily harms your credit score.  But the medium to long term benefits are much better by allowing you to increase your credit rating and lets you apply for new credit cards and offers.

4. Pay on time

This almost sounds stupid to say, but pay on time!

Sometimes we just forget but be sure to use these tips to avoid late fees and damage to your credit history.

5. Have other banking products

Credit card companies look at how “bankable” you are by assessing what other financial institutions are giving you.  It’s always good to have a checking and savings account at a bank to show that you are financially sustainable and marketable.  It’s very easy to open a checking and saving account and having these will make your life a lot easier anyway.

Walk to your nearest or friendliest bank and open one today if you don’t have one.