5 factors that affect your credit card eligibility
Credit: Pexels
When you apply for a credit card, it’s not guaranteed that you will be accepted. Finding and applying for a credit card is a complex process, and providers take a number of factors into account before giving you access to credit.
If you’re applying for a new card (or you’ve recently been rejected for one), it’s worth bearing the following in mind.
You’re not registered on the electoral roll
If you are not listed on the electoral roll, you might find it hard to get accepted for a credit card.
The electoral roll is a list of everyone who is registered to vote in public elections, such as local and national elections, as well as referendums like the Brexit vote. It is primarily used to prevent voter fraud, but it is also used to combat other crimes, as well as identifying people for jury service.
When you apply for a credit card, issuers may check your identity against the electoral roll in order to verify your identity.
While it is essential you are on the electoral roll in order to have a healthy credit score, you do not necessarily need to be on the open version of it. Credit providers look at the full register when you apply for a card.
However, some issuers might check the open register if you ask for an increase to your credit limit. If you have opted out of the open register, you can give permission for your chosen provider to conduct a full register check.
There are excessive hard inquiries on your history
If you have too many hard inquiries on your credit report, many credit card providers might not accept your application.
A hard inquiry refers to when a credit card company investigates your credit history prior to accepting your application. While these are generally fine as a rare occurrence, too many of them are a red flag.
This is because it could indicate to other credit card issuers that you might have opened several accounts in the past in order to quickly get their hands on some cash. This also implies they are likely to get into a lot of debt that is difficult to repay.
This classifies you as a high-risk customer, and thus not someone credit card providers deem a suitable applicant for a card.
Hard inquiries can stay on your credit record for up to two years.
You have late or missed payments
Most credit card providers will take into account your history of late or missed payments for previous credit cards. These are known as delinquencies, and include any account that is past due for payment.
When your account is in delinquency, your credit card company reports you to the credit bureaus, centralised companies which collect data on individuals and their credit history. Most credit card companies won’t report you until 30 days after your account is past the final missed due date.
Late payments can stay on your credit report for up to seven years. If you have lots of delinquencies in your credit history, credit card companies might think twice before accepting you.
You have a high credit card utilisation rate
While it’s important that you make all your previous credit card payments on time, this alone is not enough to indicate to providers that you are a suitable candidate for a new card. Your credit card utilisation rate is also a key factor that affects your eligibility.
Your credit card utilisation rate refers to how much of your available credit you use.
It is generally recommended that you use no more than 30% of your credit limit, and ideally no more than 20%. If you regularly exceed this, it could indicate to your potential credit card issuers that you struggle to repay borrowed credit, making you a high-risk applicant as a result.
You have a financial connection with someone with a poor credit history
When applying for a credit card, your chosen provider has a far-reaching range of considerations for your eligibility — including who you are financially linked to.
This refers to anyone (but usually a partner) who you have applied for joint credit with, and includes a joint credit card or mortgage, for instance.
As such, if you have a financial connection with someone, a credit card provider might see it when you apply. If they have a poor credit history, there is a chance your application may be rejected as a result.
Credit card providers have to assess and evaluate risk whenever someone applies for a card, and the above factors are just a few elements that might impact your eligibility for a card. Bear them in mind and take steps to prevent them, and your application will be more likely to be accepted as a result.
