I know someone who avoids credit cards like the plague. Apparently, he had one back in his early twenties, but it somehow got cloned and a scammer charged a whole lot of doodads to it. Since this happened in the 90’s, it took a while before the issue was resolved and the guy was so traumatized by the incident that he pretty much swore off plastic in the years that followed.
These days, though, a credit card has become part and parcel of a functioning adult’s life. Not is it handy for emergency cases, but swiping your card can actually be better than using cash in several situations.
Still, many Filipinos remain hesitant to avail of credit cards, for some reason or other, but there are also those who just haven’t had any luck in obtaining them. If you belong to the latter camp, this article is especially for you. Read on and see what sort of factors might be preventing your bank from issuing you that shiny piece of plastic:
1. Incomplete requirements.
It sounds contradictory, but the most effective way to borrow money from the bank is to prove that you don’t need it in the first place.
Take credit cards, for instance. Apart from filling up a form, you also need to present supporting documents like your most recent payslip or Income Tax Return, primarily as proof that you can afford to pay your credit card bills as they come due.
One of the simplest reasons why credit card applications get denied is simply because the applicant didn’t submit complete requirements. Fortunately, this is the easiest problem to remedy; simply double-check the supporting documents required by your bank and then assemble them prior to complete your application.
2. Low income.
There’s a reason why credit cards come in various tiers. From starter cards to invitation-only black, platinum, or, I dunno, diamond-encrusted cards that you can use to buy a private jet with (true story, I kid you not), each one is designed to suit a particular income bracket and the lifestyle that presumably comes with it.
You don’t need to have six figures in your bank account to avail of a credit card, but your income does have to be at least sufficient before your bank can consider issuing you one.
So, take a closer look at your finances every month. Is there still a healthy amount left in your account after all your living expenses have been taken care of? If the answer is “no,” you’d better work on increasing your cash flow and/or adding other streams of income.
Lastly, double check your application to make sure your income matches the credit card you’re applying for.
3. Pending credit delinquencies.
This is pretty much just a fancy term for missed payments. If you’ve had a credit card before and you skipped out on your monthly dues, your account will get flagged and the record of delinquency will appear on your financial history.
The only way to remedy this is to settle all your outstanding payables in due time. Remember, a dismal credit score won’t only disqualify you from getting another card; it will also torpedo your chances at availing of car and housing loans, among other things.
Let’s not even talk about how some employers look into applicants’ credit histories as part of the prequalification process.
4. Existing loans.
Speaking of loans, you need to pay them off first before you even think about getting a credit card. Having unpaid ones on your record tells credit card companies that, again, you lack the ability to pay your bills on time.
As with the previous item, work on a plan for sorting out your loans first, lest you end up accumulating even more debt.
5. Limited credit history.
Granted, this mainly affects people applying for a secondary card, but if your bank account has been inactive for at least six (6) months and/or you don’t have a record of borrowing and then promptly paying off loans, your bank might find it difficult to assess your eligibility.
Admittedly, this is a puzzling reason since having had no debts or loans should be a good thing, but there are other ways to get around it. One is to steadily build up a healthy bank balance, for instance. If you accomplish that, your bank will offer you a credit card themselves.
As you may have guessed by now, credit cards are as much of a responsibility as they are a privilege. Sometimes, getting your application for one denied might be a sign that you need to work on your finances first.
While that might not sound like the most encouraging start, it could help you identify specific ways for handling your finances better. That way, when you do manage to get a credit card, you’ll be sure to maximize its benefits.