8 Steps to Rebuild Credit Score for Instant Approval of Credit Cards
Interested in applying for a credit card? It could be that you’re looking to take advantage of frequent flyer miles, or that you want to leverage another rewards program to save you money or time. Of course, if your credit isn’t perfect, you’ll have a hard time finding a credit card company that will approve you. If your credit is particularly bad, you might not be approved at all. There’s good news – you can improve your credit score to apply for a credit card and increase your chances of being approved.
The first step to improving your credit score is to know what factors credit card providers base their decision on.
Your Credit Score
The primary factor in a credit card provider’s decision on whether or not to approve your application is your credit score. This is a three-digit number that represents your risk level. The lower it is, the higher the risk you represent. Credit card companies are in business to make money, not to take risks, so they generally don’t approve applicants with low credit scores.
Your Credit History
In addition to your credit score, your credit history also plays a role in a credit card provider’s decision. Your credit history is exactly what it sounds like – a record of your payments to creditors, lenders and others over time. This includes on time payments, late payments, missed payments, defaults, and everything else.
So, how do you improve your credit score to increase the chances that a credit card provider will be willing to take a chance on you? Here are some of the most important and effective steps to take.
The first and most important tip is this – have patience. Rebuilding your credit is not a quick process. It takes time, dedication, and a commitment to being smart with your finances. In addition, any product or program that promises to help you rebuild your credit quickly is likely not on the up and up, and should be avoided.
Pay On Time
First and foremost, make sure you pay your bills on time, every time moving forward. This applies to every debit, from your rent each month (or your mortgage payment, if you’re a homeowner) to your auto loan payment and your utility bills. Pay everything on time, always.
Pay Down Debt
One of the most significant factors in a bad credit score is carrying a lot of debt. Take the time to pay that down. If you have outstanding credit card debt, pay those cards off before you attempt to apply for another. If you have outstanding balances on any accounts, pay them off. If you have delinquent debt, contact the creditor(s) and work out an arrangement to pay it off.
Cut Down on Existing Balances
If you have a number of credit cards already, consider paying off several with smaller balances. Remember that credit card companies look at multiple financial factors, including the number of cards you own with balances. Having balances on multiple cards, no matter how high or low those balances might be, is a red flag that indicates risk.
Stop Applying for Credit Cards
It’s important that you stop applying for credit cards, loans, or other forms of debt while you are rebuilding your credit. Every application dings your credit score, dropping it lower for a short period. Plus, multiple inquiries within a short period of time make credit card companies think you’re struggling financially, which increases the level of risk you pose.
Keep Old Credit Cards Open
It might seem to make sense that you should close old cards when you pay them off, but that’s actually not true. A few older credit cards can give your credit history greater depth and length, and provide proof to credit card companies that you are responsible financially speaking. Closing old credit cards actually shortens your credit history and can lower your credit score, while simultaneously reducing your total available credit and bumping up your credit utilization ratio.
Ultimately, improving your credit score to apply for a credit card takes patience, time and a little bit of financial savvy. Watch your credit score, curate your credit history, pay your bills on time, and ensure that you’re not spreading your debt out on too many credit cards.