Understanding the Credit Card Approval Process

The credit card application process has become streamlined lately thanks to the internet, but there are still many things which people just don’t understand about the process. This can can work against credit card applicants who don’t understand the best application procedures, spend a lot of time applying for credit cards, which often  get rejected. To this end, we want to remove the veil of mystery around the credit card approval process and improve your odds of getting accepted!

Where it all Starts: Your Credit Score

Your credit score is the key to your ability to get good credit cards, loans, mortgages and car loans. Your credit score is based on several factors:

  • - Payment history (how often you’ve paid off your bills in full vs how many time times/default times you’ve had)
  • - How much consumer debt you already owe
  • - The Length of your credit history
  • - The Type of credit you use
  • - How much new credit you’ve applied for and how recent it was

Other smaller factors may include how many times you’ve moved recently, how long you’ve held down your job and what kind of income level you have. Whether or not these thing matter will depend on the lender.

All of your financial information is gathered by credit bureaus, namely the Big Three: Trans Union, Equifax and Experian (in the U.S. and Canada, most people commonly use the first two). These credit bureaus all gather different information, so it’s important to get your reports from all three if you want to do a thorough check into your financial background. These bureaus then combine their knowledge to give you a credit score.

Your credit score is a three digit number and can range from poor to average to good to excellent. The better your credit score is, the more likely it is that you will not only be approved for credit but that you’ll get a good deal. Your credit score will be a major factor in whether or not a lender will give you money, so make sure you know what it is. You can request your score from Equifax or Trans Union and you are entitled to ask for your credit report too so that you can not only see your score but also see what impacted it.

Applying for Credit

Ok, so you have your credit score in hand and you’re ready to start applying! There are a few ways to do that:

  • - Online. Online is fast, easy and free. You can get approval in just a few minutes and you can easily check out the card you want and compare cards. Even those with poor credit can now enjoy online, instant approval due to competition between different credit card companies.
  • - By mail. Some people still apply for credit via snail mail. This takes longer, but it’s often thought of as being more secure.
  • - In person at your bank.

Most people go for the online route because of instant approval and because they can do it right from their own home, which is convenient.

Once you’ve sent in your application to be approved for credit, a few things happens. First, your application is checked over by the creditor. In the case of instant approval, the process is brief; they check your credit score and if it’s high enough, you’re approved. However, getting the instant approval does not guarantee success; although you may get the card, you may not get the greatest deal. This is because after the approval is done, the creditor has time to fully check out your background and application and if things aren’t looking good enough, you may have to deal with a higher interest rate or a lower credit limit.

With credit card applications that aren’t going through the instant approval process, the creditor will more carefully check over your application right from the start. They will look over your credit score, your financial history, your background and any other pertinent information in order to determine your credit worthiness.

A great financial goal is to get as high a credit score as possible. The higher it is, the more credit you can apply for and the better the deal you will get. If nothing else, getting a mortgage is much easier when you have a clean credit score.

It’s actually not a very complicated process, just one which involves a lot of numbers and players. To recap:

You apply for a credit card; the creditor checks your credit score; you are approved with conditions based on your credit history; you get your credit card!

Savvy shoppers will make sure they know their credit score before they apply so that time isn’t wasted and because too many applications for credit show up as a black mark on their score. Otherwise, the process is now pretty streamlined and effortless. Enjoy your credit card!


Darryl Van Dyke has over 20 years experience in the finance industry. He is currently the senior editor & contributor at CardSight.com.