How to Qualify for a Credit Card
Getting a credit card isn't as simple as filling out the application and getting
approved. Credit card issuers have criteria they consider for each credit card applicant.
Before you apply for a credit card, it helps to know how to qualify for a credit
card. That way, you can estimate your chances of getting approved.
Make sure you're old enough for a credit card.
The legal age to qualify for a credit card on your own is 18. However, if you want
to get your own credit card when you're under 21, you need to have your own steady
source of income before you can be approved for a credit card. Otherwise, you'll
have to have someone co-sign with you.
The law doesn't specify that you have to earn a full-time wage to get a credit card.
You can put your annual earnings from your part-time campus on your credit card
application. If it's high enough, the credit card issuer will consider you for a
Have your own income.
The new restriction means you can't put your spouse or parent's income on the credit
card application unless you're applying for a joint credit card, even if they give
you money every month. Having a reliable source of income gives you the ability
to pay for the credit card purchases you make. Not only do you need to have your
own source of income, your monthly income should also be high enough for the credit
limit you're asking for.
Have a positive credit history.
A good credit history will help you get approved for a credit card. The better your
credit score, the more likely it is that you'll be approved. Some credit card issuers
only approve applicants who have spotless credit reports. Others will approve you
application as long as your late payments aren't in the past two years.
Having a negative credit history with a specific credit card issuer could keep you
from getting approved with that same issuer. For example, if you had a charge-off
with a prior American Express credit card, you may not get approved for a new Amex
Don't worry if you don't have the best credit - there are credit cards that approve
applicants you have bad credit history.
Don't have a lot of debt.
Credit card issuers will consider the amount of your other credit card balances
and loans before they approve your application. If your credit utilization is too
high, you might be denied. How much debt is too much varies by credit card issuer
and by credit card, too. Aim to keep your credit card debt below 30% of your credit
Credit card issuer may compare your debt to your income to decide whether you can
afford another credit card balance. A high debt-to-income ratio would indicate that
you don't have enough income to pay back another credit card balance.
Get a co-signer.
If you can't qualify for a credit card on your own - because you're not old enough,
you don't have sufficient income, or you have bad credit - you can ask a friend
or family to co-sign your application. The co-signer has to meet the credit card's
qualifications for both of you to be approved.
When you ask someone to help you get a credit card, realize that person is taking
a risk by co-signing for you. If you don't pay the balance back, they co-signer
will be responsible for the balance.
Save up a security deposit.
People with new credit or bad credit, who can't get approved for a regular credit
card, may have more luck with a secured credit card. The secured credit card requires
you to make a security deposit against your credit limit before you can be approved.
After about a year of timely payments you may qualify for an unsecured credit card,
presuming no other negative information is added to your credit report
Many secured credit card issuers will accept a security deposit as low as $300.
If you don't have that much, start setting aside $50 to $100 each month until you
have a good security deposit saved up.
A Payday Loan
A Payday loan (also called a Payday advance) is a small, short-term, loan secured
against a customer's next pay check. The loans are also sometimes referred to
as cash advances, though that term can also refer to cash provided against a prearranged
line of credit such as a credit card. Pay day advance loans rely on the consumer
having previous payroll and employment records. Legislation regarding payday
loans varies widely between different countries and, within the USA, between different
The Payday Loan Process
The basic loan process involves a lender providing a short-term unsecured loan to
be repaid at the borrower's next pay day. Typically, some verification of employment
or income is involved (via pay stubs and bank statements), but some lenders may
omit this. Individual companies and franchises have their own underwriting criteria.
In the traditional retail model, borrowers visit a payday lending store and secure
a small cash loan, with payment due in full at the borrower's next paycheck. The
borrower writes a postdated check to the lender in the full amount of the loan plus
fees. On the maturity date, the borrower is expected to return to the store to repay
the loan in person. If the borrower does not repay the loan in person, the lender
may redeem the check. If the account is short on funds to cover the check, the borrower
may now face a bounced check fee from their bank in addition to the costs of the
loan, and the loan may incur additional fees and/or an increased interest rate as
a result of the failure to pay.
In the more recent innovation of online payday loans, consumers complete the loan
application online (or in some instances via fax, especially where documentation
is required). The loan is then transferred by direct deposit to the borrower's account,
and the loan repayment and/or the finance charge is electronically withdrawn on
the borrower's next payday. According to one source, many payday lenders operating
on the internet do not verify income.