8 Practical Ways to Increase Your Chances of Credit Card Approval

 

The Philippine consumer market is certainly no stranger to credit cards, with modern cards making their first appearance back in the early 1980s. However, the growth of online retail and the resulting demand for safe yet convenient digital payments has resulted in credit cards becoming more popular than ever. The competition between local card issuers has also heated up, with credit cards now featuring generous rewards as well as low annual fees.

These new rewards-based cards are especially compelling for Filipino consumers. In particular, using cashback cards can be a smarter financial choice compared to simply using cash, especially when the chosen card closely aligns with the cardholder’s spending habits. 

Fortunately, you no longer have to fill out paper forms to get a card that works for you. Many issuers now offer online credit card application forms with faster, more straightforward processing. 

In any case, issuers must evaluate multiple factors before they approve your card application. These include your current credit score, credit utilization, current income, and payment history, among many other factors. So, if you want to be approved for the card you want, make sure that these elements are all in order. Additionally, try to develop the smart habits below to guarantee great outcomes on your next card application:

  1. Pay Your Bills on Time

Philippine card issuers generally put a heavy weight on your ability to pay bills on time. Regardless of whether you’re planning to get your first credit card or a new one with a higher credit limit to better match your spending habits, it helps to prioritize timely payments on utility bills, rent, insurance premiums, and debts to demonstrate your financial responsibility. Even the smallest missed payment can stay on your credit report for years, so be sure to set reminders to settle your dues on time. It helps to automate your payments so you don’t have to worry about forgetting when you should pay specific bills.

  1. Build a Strong Credit History

For those who are new to credit or have limited credit history, you may not be able to secure the exact credit card you want even if you do have a lot of cash in the bank. In these cases, you may want to start with a more accessible credit card or some other mainstream loan product so that creditors can see how you handle your finances. Use these tools for regular expenses and pay off the full balance each month. After a few months, you should be able to establish a healthy credit history that could positively influence your next credit card application.

  1. Ensure Steady Employment

If you haven’t established a long credit history, having a stable job with a regular income will be your best bet for being approved for the credit card you want. If you’re in the middle of a job transition or have inconsistent income, you may want to wait until your financial situation stabilizes before applying, particularly if you’re aiming for high-limit cards.

  1. Increase Your Income

Even if you have irregular income, being in a higher income bracket should still make you a more attractive borrower to credit card companies. If you’re dead set on qualifying for the credit card of your dreams, consider taking on a side job to supplement your current cash inflow for some time before your application.

  1. Reduce Your Debt-to-Income Ratio

Mainstream lenders assess your ability to manage debt based on your debt-to-income ratio (DTI) or the proportion of your income used to cover debts. The lower your DTI ratio, the better the odds that your card issuer will consider you qualified for a credit card with a high limit. You can increase your DTI by paying down existing loans or increasing your monthly income.

  1. Don’t Max Out Your Credit Lines

Your credit utilization ratio should be kept as low as possible. There is some argument about how low it should be, but a ballpark figure of under 30% seems to be widely accepted. Regardless, you should still aim to pay off any debts so that you can provide your card issuer with an idea of your financial management capabilities.

  1. Limit Your Number of Credit Applications

You might be surprised to learn that applying for a credit card will temporarily reduce your credit score. These “hard inquiries” trigger an automatic lowering of your credit score, which intends to screen individuals who are desperate for credit. Therefore, submitting multiple applications may significantly reduce the odds that you will be approved for the card or credit limits you want. To increase your chance of getting approved, be very selective of the cards you’re applying for to avoid unnecessary hits to your score.

  1. Always Manage Your Finances Responsibly

As you might have gathered from all the other tips so far, consistency is key to getting the high-value rewards credit card you’ve been dreaming of. You don’t have to do everything perfectly but you must practice common sense when it comes to managing debts and choosing the right payment methods. The longer you maintain a track record of responsible credit use, the more likely your application will be approved.

 

Your Journey to Better Credit Starts Today

Qualifying for the perfect credit card isn’t complicated. So long as you ensure your credit history’s visibility and stay on top of your finances, you should eventually qualify for a card that will bring you closer to the lifestyle you deserve. Start these habits today and you should see better outcomes on your card applications very soon.