There are several other factors other than your credit score that are consider when granting you a new credit card. You should know that the eligibility for credit card approval process is based on your credit reports if your application for a new credit card was denied.
When deciding whether to approve your application for a new credit card, card issuers consider more than just your three-digit credit score. Among the factors considered by credit card companies is your personal credit history. These factors may help determine whether you are approved for a credit card and explain the credit card and debit card difference in detail.
Number of missed or late payments
Your credit score is impacted by 35% by a history of consistent and timely payments. However, a late payment does not negatively impact your credit score. As a result, if you go to collections often or pay late, you will hurt your credit score. A few late fees and even an increased interest rate won’t deter creditors from charging you for late payments.
This is a situation where you end up paying for in two ways: immediately for missing payments, and then later for increased loan and credit line rates. Unfair charges on credit cards are common. Neglecting potential inaccuracies or failing to check and correct errors on your credit report can also hurt your score.
Even credit reporting agencies make mistakes. They may think they know everything and see everything. Unless you are proactive enough to catch and correct these mistakes, you may end up losing a lot of money. Checking up the latest details on your credit score is simple and free, so don’t let this responsibility slip.
Number of Credit Requests
Credit bureaus get the wrong message when you suddenly request new credit, which lowers your score. In most cases, this occurs when one applies for more than one credit line within a short period. When, for example, you apply for two credit cards in January, a consolidation loan in March, then a car loan in April, your credit score is destined to decline. Especially if you are beginning a “new chapter” of your life, these circumstances are only temporary. But pay attention to how often you apply for new credit.
Increased Debt/Credit Ratio
You may experience a credit score drop if you suddenly have a spike in balance but you haven’t been given a new credit line. If the balance is on a credit card and it’s not going to be paid off immediately, it’s especially important. An additional 30% of your credit score is account for by the amount of extend credit you utilize. Keep a careful watch on the credit extended to you and keep your balance low at all times.
Closing Cards With Remaining Balances
It is not usually beneficial for your credit score to remove a credit card from your record. In fact, closing the card with a balance will damage your credit score if you still owe money on the card. Because your credit score is influence by your overall credit history, removing this card would result in a loss of credit granted to you.
All of us have experienced periods of unemployment. Unemployment benefits are available to help us get through the tough times. It is important to keep in mind that unemployment benefits will slightly hurt your credit rating, which is why you should receive them for as little time as possible.
Even though they are not aware of your unemployment status, credit bureaus recognize the reduction in the income you have experienced. Consequently, your credit score is likely to suffer since you are unlikely to make timely payments on your debts.