You Might Have a Hard Time Getting Approved If...

Some people can expect to have a hard time getting approved for new credit cards and loans. You might be one of those people.

You have a low credit score. Credit scores are designed to predict the likelihood that you’ll pay back a loan or credit card balance. Since your score is based on your past payment habits, banks trust it. If you have a low credit score, indicating that you haven’t always paid on time, you’ll probably have a hard time getting approved.

You don’t have a credit score. Not having a credit score at all is just as bad as having a low credit score. If you don’t have a credit score yet, it indicates that you may not be experienced with credit. And, you’re risky because you haven’t yet established a history of paying on time.

You don’t make enough money or you don’t have a job. Steady income is a requirement to get approved for credit cards and loans. While there are some exceptions, a steady income is generally the best indicator of your ability to repay what you borrow. Without money coming in every month, it’s likely that you won’t be approved.

You’ve recently filed bankruptcy. Filing bankruptcy is a strong indicator of recent financial trouble. If you were having trouble paying back your old debts, creditors are fearful that you won’t have the means to pay back your new debts. Don’t worry. Bankruptcy doesn’t hurt forever. You’ll have the most trouble getting approved for new credit in the most recent months after your bankruptcy.

You have a lot of delinquent accounts. Creditors don’t just check your credit score, sometimes they also review your credit report to evaluate your most recent payment habits. Having several delinquent accounts, especially recent delinquent accounts, makes you a risky borrower. Clearing up these delinquencies will give you a better chance of obtaining new credit.

You have an eviction on your credit report. Being evicted is serious, almost as serious as a foreclosure, repossession, or bankruptcy. Not only can an eviction make it hard to be approved for new credit, it can also hurt your rental applications. You may be able to lessen the damage from an eviction by paying any outstanding balance. However, landlords may avoid approving you for a new apartment.

There’s a fraud alert on your credit report. A fraud alert is intended to protect you against credit card fraud and identity theft by requiring businesses to confirm your identity before approving applications. However, the extra step of confirming your identity can actually keep you from getting approved, especially for instant approval applications.

You have too much debt. It's hard to know what credit credit card issuers consider to be too much debt. The amount may vary depending on the credit card you're applying for and your income. Generally, aim to keep your credit card balances below 30% of the credit limit. And for a mortgage loan, try to keep your debt-to-income ratio - your monthly debt payments divided by monthly income - below 36%. Having less debt means that more of your income is available to pay back what you borrow.

When you put in an application, there's no guarantee that you'll be approved. But, if you know what banks are looking for, you can try to be the best candidate possible.