What Creditors Look for When Checking Your Credit Card Application

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A creditor has a lot to consider before giving the green light to allow someone to have the use of a good credit card. There are three main areas a creditor will examine that have become known as the Three Cs of Credit. These three Cs are capacity, character, and collateral. Even if it looks as though you may have a guaranteed approval credit card, there will be a point in time that the creditor will be looking at these Three Cs of Credit (as well as your credit score and report). Different creditors are going to have different standards for their cards. Some might be more interested in some areas than in others, and others may have extremely high standards. If you fail to meet any of these, you will not be issued a card.

• Capacity. The big question here is whether or not you can repay the debt you accrue on your card. The main way for a creditor to decide on this information is by checking out your employment history. By looking at this information, the creditor is able to see what you do, how long you have held a job (or different jobs), and the amount you earn. Any expenses you have are also important so that the creditor will be better able to understand what you might use your card for and how much you might put on it. Items such as child support or any dependents you have will be examined and it will be decided if you will have the means to repay the card.
  
• Character. Even if you can repay the card, the second question is, will you? Some people may have plenty of money to repay their card, and yet do not do so. Your credit history will inform creditors of your past transactions and whether or not you have made all your payments and if they have been on time. They might also look at how long you have lived in one area, if you own your own home or if you rent an apartment, and other factors that attest to your responsibility both in life and financially.
  
•  Collateral. If you do not repay your card, you may have items that can act as security – so the creditor wants to know if the company will be protected should you shirk your repayment duties. Do you have other finances that could be used to cover the amount of debt you owe? If you do, it may go straight toward your credit card balance.

You may not always get the credit card you apply for, depending upon the details of your information and the creditor’s standards. However, all of this must be done in a fair manner. If you apply online for a credit card, you should not have to provide certain amounts of information that could be used to encourage bias against your application. You cannot be discriminated against due to your marital status, age, race, religion, or national origin. Likewise, if you receive government help such as welfare or social security, or other benefits.

If you apply for a credit card and the creditor you apply with opposes your loan request, flat refuses you a loan even if you qualify, gives you specific terms even though someone else with the same background received a different set, closes your account because of your age, race, or other factors that you should not be discriminated against, then you can file a complaint with them and should find another, more reputable creditor to work with.

There are a few things that a creditor may want to know in order to be sure you are able to receive a credit card. Usually you must be 18-21 in order to sign up for a good credit card. This is because you have to be of a certain age in order to enter into a legally binding contract. However, even if you are this young, it still does not mean the creditor can manipulate your account, and the same goes for other ages as well. Just because you are old enough to retire does not mean the creditor can suddenly cut off your credit altogether. They must also look at the changes in your finances in order to adjust your credit accordingly or if they need to make any evaluations of your application. Creditors are also allowed to use some information when working with applications in order to make the best decisions regarding those who apply for credit cards. For example, if you are young and have a low income, the size of the loan may be different than for someone that is older, as will be some of the terms such as length and down payment amount.

Even though you cannot be denied credit just because you are on some kind of public assistance or government assistance, there are certain factors surrounding this information a creditor will usually take into account. If you have dependents, it may be necessary to find out how old they are. The creditor will want to know the approximate length of time you will receive assistance; are you trying to get a steady paying job or are you relying solely on the assistance you receive? Though receiving assistance cannot necessarily be used as a black mark against you, not having a job very well could.

If you are not just looking to apply for a credit card, but also to get a mortgage or other major loan, the above stipulations will also apply in regards to discrimination and application processes. This also extends to the appraisal given of a property that includes the race of the people in the surrounding properties.

When you finally do apply for a credit card, either by using credit card applications online or through the mail, there are a few things you should remember if you want to stay away from building a bad credit history. Do not lend your card to someone, keep in mind that anything you spend on the card you will have to pay back, pay attention to how much you are spending in order to keep out of debt, and save your receipts. This way you can keep a close eye on the amount you are spending and will be able to correct any discrepancies you find on your bill. And as always, do whatever you can to pay your bill on time and in full. This can keep you debt free as well as finance free – something everyone always wants to be.