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by Elizabeth Aldrich | Updated July 21, 2021 - First published on Dec. 23, 2019
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You should understand your chances of approval before applying for a credit card.
The fact that you need credit to qualify for credit might be the most frustrating credit-related dilemma, but there's a close runner-up: The only way to know whether or not you'll be approved for credit is to apply, but too many applications for credit can tarnish your credit score.
When you apply for a credit card, the issuer will perform a hard pull on your credit report to decide whether or not you're a risky borrower. These hard pulls show up on your credit report and remain there for two years, and they're factored into your FICO® Score under the "new credit" category, which makes up 10% of your credit score. Luckily, this is one of the least important categories, so one or two recent credit card applications may only cause a credit score decrease of a few points, if any at all. The decrease is also temporary, as new inquiries only affect your credit score for one year.
However, sending out more than a couple of applications in a short period of time -- within six months or so -- can lower your score more drastically. On top of that, too many recent inquiries on your credit report is a red flag to many lenders, as it's common for people in severe financial trouble to apply for lots of credit.
This explains why it's important to make sure you've got a good shot of approval before applying for a new credit card. Luckily for you, the 2019 Credit Card Market report from the Consumer Financial Protection Bureau (CFPB) shows credit card approval rates by credit score and even highlights the most successful application methods.
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The CFPB breaks down consumer credit scores into six categories: superprime, prime, near-prime, subprime, deep subprime, and no score. Below you'll find approximate approval rates for general-purpose credit cards in 2018 at each credit score tier.
|Superprime||720 or greater||80% approval|
|Prime||660 to 719||60% approval|
|Near-prime||620 to 659||40% approval|
|Subprime and deep subprime||619 or less||< 20% approval|
|No score||No credit score||< 20% approval|
The numbers show that consumers with prime and superprime credit scores are more likely to be approved for a given general-purpose credit card than not. It's more challenging for consumers with near-prime credit to be approved, but if they target credit cards that cater to consumers with credit scores in the mid-600s, they might have luck. As for folks with credit scores below 620 or no credit, their chances of approval are slim.
However, these numbers paint a very broad picture of credit card approval rates. The requirements -- and rates of approval -- differ drastically from credit card to credit card and card issuer to card issuer. The best credit cards typically require excellent credit. These include:
On the other hand, there is an increasing number of credit cards geared toward consumers with bad credit or no credit. And these include:
The best way to understand your chances of approval before applying for a new credit card is to research that credit card's credit score requirements and make sure you meet them. Many credit card issuers also offer "pre-qualification" tools that ask you a few basic questions and give you a sense of whether or not you might qualify. Before you use them, check for language stating that they won't perform a hard check on your credit, which would impact your credit score. Pre-qualification can be immensely helpful to your credit card research process, but remember that it's still not a guarantee of approval.
Apart from seeking out cards with credit requirements that match your credit profile, data from the CFPB report suggests that the channel through which you apply for a credit card could impact your chances of approval.
For applicants with superprime or prime credit, the highest approval rates for general-purpose credit cards came from applications based on pre-screened solicitations. These are flyers people received in the mail or through email with credit card offers stating they've been pre-screened. These offers often include a code that's meant to be entered into the credit card application.
The highest approval rates for near-prime, subprime, and deep subprime consumers came from mail-in applications. However, mail-in applications are often sent in response to pre-screen offers, so consumers in these credit score tiers might also have more luck applying for credit cards for which they've already been pre-screened.
If you have a credit score, regardless of where that score falls, applying for pre-screen offers can increase your odds of approval. However, there is little point applying for a credit card that isn't a good fit, even if your chances of approval are higher. Make sure any credit card you apply for comes with good terms and aligns with your spending habits. If the pre-screened offers you receive are not a good match, try researching the best credit cards that fit your credit profile and using their pre-qualification tools to gauge your odds of approval.
Unlike other segments, applicants with no credit score didn't have high rates of success when they applied through pre-screen offers or mail. Instead, consumers with no credit had the highest approval rates when they applied in person, with their approval rate jumping from just under 20% for digital applications to over 40% for in-person applications.
The CFPB postulates that in-person applications might be more successful for consumers without credit because the risk of synthetic fraud -- which is when someone creates a false persona using real consumer data in order to apply for credit cards -- is much lower with in-person applications. No-credit consumers also tend to have better luck applying for a credit card with a bank or credit union where they already have an existing, positive relationship, and so it would be worthwhile for those consumers to go into their local branch and apply in person.
Regardless of how you apply, there's no way to guarantee you'll be approved -- but with proper research and knowledge of your credit score, you can turn the odds in your favor.
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