5 Ways to Improve Your Chances of Getting Approved

For some, credit is an afterthought; credit comes naturally and in large amounts. Others, ummm, not so much. Maybe you went through a divorce.  Maybe your parents or family contributed to you not-so-high credit score. Or maybe you had good credit but over-extended yourself. No matter how you got there, your situation is real and you need access to credit in the 21st century.

A credit score under 620 will illicit a number of additional request or reviews by most credit card agencies. In the past the trigger point was lower (490-580), but with the credit bubble and Bernie Madoff schemes, everyone from governments and banks are stringent with offering credit. With these changes, there are 5 things to know to set yourself up for success:

1. Know Your Score and Why it is, What it is.

Request your free credit report each year and review it thoroughly. If you question anything listed, address it. This may mean calling, emailing, or visiting a business that reported on you financial activity.

2. Bring Any Credit Accounts Current

When a crediting agency reviews your credit report they will look to see both your spending habits and payment habits. Do you spend more than you make? Are you a binge spender or steady? Do you do a lot of big purchases? Whatever your habit, make sure your existing credit and installment accounts are in good standing. Even under 30 days late is acceptable for most. A small cash advance can be used to help get you over a hump or bring an account current before applying for additional credit.

3. History Matters: Home, Work and Pay

Your living situation matters as well. A lot of address changes gives the impression you are in an unstable situation and if credit is extended to you, it may be hard for the agency to track you down. Secondly, you have to be able to pay back your credit purchases, so if your jobs are also sporadic, that can cause concerns. How do you fix that? Establishing a business and a business account allows you to fill in gaps of employment with “self employed”, which improves your overall credit worthiness. Read more about using entrepreneur status to fill in resume gaps and improve your credit.

4. Assets that can be Liquefied

If you have ever used a rent to own center or some short-term loan services, they may have asked you about electronics you own or furniture. The reason for this is to see what liquefiable assets (items that can be sold to pay off debts and debtors) you possess. Have a priced and itemized list prepared to show that, worse comes to worse, you can pay your debt by selling your goods.

5. Co-Signers and References

Applying for credit often means applying for trust. Creditors are trusting consumers to pay them back on purchases. Co-signers are individuals willing to put their money where their mouth is when it comes to you and your credit trustworthiness. References can help creditors make the choice of granting better terms or may be the difference a “yes” or a “no” at the end of the process. References are used by creditors to coo-borate your credibility and track you down in the case the credit agency looses your contact details.

As always, it is important to manage your finances and follow a budget. Credit should be an extension of your financial resources not a crutch or emergency fund. Rarely does credit card access lead to a better financial management or solve low income.