You may not need a credit card right now, but it’s likely that at some point in the future, you may well do. Credit cards enable individuals to undertake larger transactions, purchase goods online, rent cars and cover the costs of unexpected expenses. They are useful financial tools which, when used properly, can help you to manage your money effectively.
If you intend to apply for a credit card in the future, there are a number of things you can do today to improve the likelihood of qualifying.
Follow these steps to qualify for a credit card when you need one
First of all, ensure that your bank accounts are in good order. If you don’t have a credit card, the likelihood is that you frequently use a savings or cheque account for transacting. Lenders will assess these accounts for evidence that you’re a responsible money user.
Next, always ensure that you repay any existing credit promptly. As soon as you begin using credit – which includes store cards, loans and cell phone contracts – your credit history is established. This history includes detailed information about the type of credit user you are, and reveals whether you pay your bills promptly, or whether you’re a tardy credit user.
Each item of information on your credit history can remain for up to 5 – 10 years, so if you default on payments now, it may still appear on your credit history in the future. By being a responsible credit user (paying bills on time, not over-extending yourself financially and never falling into arrears), you’ll build a good credit history and be considered creditworthy by lenders – and thus improve your likelihood of qualifying for a credit card.
Thirdly, do not get into too much debt. Resist the temptation to have multiple store cards, clothing accounts or other types of unnecessary credit. When you submit your credit card application, the lender will closely inspect your current financial commitments. If you already have a lot of debt – even if you have not used it all – the lender could say you are over-extended and decline the application.
Lastly, don’t submit more than one credit card application at a time, even if they are for different products. Lenders will typically view multiple applications over a short period of time as an individual trying to accumulate a lot of credit at once, and your ability to qualify for your chosen products will be affected. Lenders usually also keep a record of applications for a period of time and, should you apply again within that period, you will receive the same outcome (unless your financial situation has changed).
Check your credit report before submitting your credit card application
If you’ve followed these steps, you’ll be in a good position to apply for a credit card. However, there’s one more thing to do before you submit your credit card application: Check your credit report.
In South Africa, The National Credit Act (NCA) allows you the right to access one credit report free of charge once a year. So if you’re accessing your credit report for the first time in 12 months, you can receive free access with most South African credit bureaus.
This report is usually valid for 30 days and will enable you to assess your current credit status. What is very good about this report is that you can ensure there are no errors on it. Errors could seriously damage your credit score – and your reputation – and information that is proven to be incorrect will be removed. However, it is up to you to find any errors that may exist, and to query these or register a dispute with the credit bureau.
Check your online Experian credit report with CreditExpert, one of South Africa’s most trusted online credit report monitoring services. Visit www.creditexpert.co.za to access your report now.
Once you’re ready to apply, select a credit card from a reputable lender. Larger, well-established lenders are often able to offer more competitive interest rates and more flexible terms.
Submit your application, online or via a bank branch, and within a few days or less, you’ll know whether it has been successful.
About the Author:
Plastiq is a South African credit card portal that enables users to find, compare and apply for South African credit cards from one of the country’s largest and most respected banks.