What Do Creditors Look for on a Credit Card Application

Once you have submitted your credit card application there are three things that creditors look for. It is important that creditors protect their interests. In order to do that, a creditor will consider your application carefully and determine the answer to three questions.

Can You Repay?

The most important question that a creditor will want answered is whether or not you can repay the date. The information that is usually needed on credit card applications is employment information and work history. You must disclose your occupation, how long you have been working and how much you earn annually. Other things that determine your disposable income like the number of dependents and if you pay child support or alimony.

Do You Honor Your Debts?

People are always surprised when creditors consider a borrowers ability to repay their debts. To determine a person’s character, creditors will consider your credit history. This includes how much you owe or how often you borrow funds. Your ability to pay your bills on time and whether you live within your means goes a long way to determining your character. A record of living within their means and have proven stability by living in the same place and having the same employer for a number of years would be desirable on a credit card application.

Can You Secure Your Debt?

Collateral is considered because it shows the amount of protection that a creditor has in the event that you are unable to repay your debts. Your credit application requires that you list the amount of collateral that you have. This is important because it shows the assets that you are using to secure your loan. Savings, investments and property are considered acceptable forms of collateral.

After considering these three factors, a credit card company will reach their determination. Depending on your creditworthiness, you will be offered either a low fixed rate credit card, a low APR credit card or high interest credit card. While some creditors set high standards; others set low standards but offset that with additional fees or high interest rates.

There is no set "system" that is used across the board. One creditor's scoring system will differ from the next. Each of the three categories of your credit card application is worth a certain number of points. You are then rated according to your scores. Depending on the lending standards that a creditor has set, one creditor would reject a candidate that another would happily accept.

What Information is Unusable?

There is no guarantee that you will be granted credit, but your right to try an obtain credit is protected. An organization called Equal Credit Opportunity Acts has determined what information can and cannot be used when applying for regular and instant approval credit cards. According to the ECOA a creditor must use the same standards for everyone that submits an application.

Applicants cannot be subjected to discrimination on the basis of age, gender, marital status, race, religion or national origin. Creditors are also not able to discriminate against individuals that receive any kind of public income like VA benefits, social security or welfare. The protections offered by the Equal Credit Opportunity Act mean that everyone is given a change at obtaining fair credit.

In addition to the above you cannot be discouraged from applying for a loan. You cannot be refused for a loan if in fact you do qualify. You also cannot be given different terms from a person with similar credit worthiness. An existing account cannot be closed due to any discriminatory factors or because you chose to exercise your rights under federal credit laws. One factor that can be used in determining your creditworthiness is your immigration status.

Special Allowances

Strict regulation has made it possible for anyone older in years to get fair credit credit cards. In the past creditors would deny credit to people over a certain age. It was even reported that credit limits would suddenly be cut off or reduced. The following are the age related regulations that you should be aware of when submitting credit card applications. These regulations apply whether you are applying for credit cards with low APR or no annual fee credit cards. No matter what type of credit card you are applying for, the following age related laws must not be broken.

• You cannot be turned down or be offered reduced credit because of your age.
• Retirement income listed when applying for credit cards must be considered.
• Your existing credit account cannot be closed when you reach a certain age. You are also not required to reapply just because you have reached a certain age.
• You cannot be denied credit or have your account closed because credit life insurance is not available to a person your age.

While creditors may score your age to determine your credit worthiness, individuals that are over the age of 62 must be given at least as many points as a person as any person under the age of 62.

The law does specify that creditors can consider certain factors that are related to age. Information like how long until you retire or how long your income will continue can be required to complete the credit card process. Older applicants may not qualify for larger loans with low down payments and long monthly payment terms. That same person may however qualify for a smaller loan with a larger down payment. Declining income in an older person can usually be offset by a solid credit history. Regardless of your situation, just remember that you have rights to be evaluated by the usual standards of creditworthiness.

How is Government Assistance Considered?

Any person that is receiving public assistance must still be evaluated by the same standards of creditworthiness that everyone else is subjected to. What that means for you is that say a significant portion of your income is made up of social security or public assistance income; you cannot be denied credit solely based on that.

If however you receive this assistance because of your children, a creditor may consider the age of your dependents. This is because once those children reach a certain age you may face a reduction in income. So creditors use this information to determine how long the government-assistance income will continue and offer terms accordingly.

Everyone is in a different situation. We all have different incomes and credit histories. Regardless everyone is entitled to a fair credit card with terms and conditions that are applied to everyone considered to be in the same situation.

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