If you’re new to the process of applying for a credit card in the Philippines, the issue of approval may initially feel like you’re solving a mystery. Some applicants receive instant approval, while others face rejection seemingly without a clear explanation. Why do approvals vary from person to person?
Banks consider several key factors when reviewing credit card applications—some of which you may not know about if you’re filing your first one. To increase your chances of getting approved for a credit card, here are some criteria that you should be aware of:
1) Your Credit Profile
First, banks assess your creditworthiness by evaluating how well you manage your existing financial obligations, such as loans, postpaid mobile plans, or utility bills. If you have a history of on-time payments, you’ll be considered a lower-risk borrower who demonstrates financial responsibility. On the other hand, missed payments, defaults, or a pattern of late payments could be considered red flags and may significantly hurt your chances of approval.
You might be thinking, What if I’ve never taken out a loan or owned a credit card? While having no negative history is a plus, having no credit history at all may also make banks hesitant to offer you their most powerful cards. In such cases, you may first want to establish your credit profile by applying for a secured credit card. Since you’ll be depositing money as collateral, you’ll have a higher chance of getting approval.
Another option is to apply for a credit card from a bank where you already have a savings or checking account that shows a history of maintaining a healthy balance and consistent transactions. Some banks even pre-approve customers who show such a healthy banking history. In this instance, your bank may offer you a credit card without needing to apply just because you’ve been a loyal depositor. You have the option to take advantage of such opportunities to simplify your credit card approval process.
2) Your Income and Financial Stability
Your income is a key factor banks consider when reviewing credit card applications. Although different credit cards have varying income requirements, a premium card typically requires a higher income.
This highlights the importance of choosing a card aligned with your income. For example, your chances of approval will be slim if you apply for a card that requires a minimum income of PHP 50,000 per month and you only earn PHP 30,000. In this case, you might want to consider applying for a credit card for someone who earns within your range so that your approval chances will increase.
Additionally, banks don’t just look at the amount you earn. They also consider the stability of your income. Employment at a well-established company is more favorable than an inconsistent freelance income. Having at least one to two years of tenure with your current employer also reassures banks that you have job stability and a steady source of income for future credit payments.
If you’re a freelancer or business owner, it’s still possible to get approved. However, you’ll need to provide additional proof of income such as your tax returns, bank statements, and business registration documents to strengthen your case. The more documentation you provide, the better your chances of proving financial stability and getting approved for your desired card.
Regardless of your employment status, it’s important to be truthful about your income. Inflating your income on an application may seem like a harmless way to boost approval chances, but banks verify salary details through the documents you submit. Any inconsistencies could lead to immediate rejection. It’s always best to provide accurate and verifiable information to the best of your ability.
3) Your Existing Debt and Debt-to-Income Ratio
As mentioned above, banks also investigate your existing financial obligations. These include personal loans, car loans, and credit card balances. Moreover, a major factor in determining your creditworthiness is your debt-to-income ratio (DTI). If too much of your income is already tied up in existing debt payments, banks may hesitate to approve you for additional credit.
For example, if you earn PHP 40,000 per month but are already allocating PHP 20,000 to loan payments, that 50% DTI could discourage banks from extending additional credit since it indicates financial strain. Try to keep your DTI below 30% to improve your chances of approval and to signal to banks that you can handle the additional credit responsibly.
4) Your Application History
Submitting multiple credit card applications in a short period might seem like a good idea, especially if you’re not settled on your choice of creditor yet, but this can work against you. If banks see that you have applied for several credit cards at once, they may assume you are in urgent need of credit, which can raise red flags. The resulting negative perception can decrease your chances of approval.
Instead of sending out multiple applications, research and identify credit cards that most closely align with your income and spending habits. This approach will not only increase the likelihood of approval, but also demonstrate that you have a well-thought-out financial strategy for managing your credit card.
Improve Your Chances of Getting Approved
You don’t have to go into your credit card application totally blind. If you know what banks look for, you already have several vital clues at your disposal with regard to what to prepare for your application.
Start by making it a long-term goal to establish a positive credit history for yourself, simply by paying bills and loans on time. Then, choose a card that matches your income level (remember, avoid multiple applications at once).
Also, do everything you can to keep your existing debts manageable and to ensure that they remain so when you take on the additional debt of a credit card. Above all, remember that you don’t necessarily need to be in a rush to get a credit card if your debit card, e-wallet, and other sources of funds work just fine to sustain your lifestyle; ideally, your card will make an already financially healthy life even better.
A well-planned approach like this will ensure that your credit report remains in good standing and increases your chances of approval for your desired card. Knowing what you know from the tips above, do the prep before you apply for a new credit card in earnest.
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