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Are Online Credit Card Applications Too Easy?

By: Michael D. Strauss The days when the only way to get a credit card was to visit your bank in person are gone forever. Nowadays, it's even quite old fashioned to apply for a card by mail - it's much easier and quicker to apply online, and in many cases you'll even get an instant decision on whether your application is accepted or not. While this is obviously a great convenience, there is a downside to online credit card applications: they can actually be too easy, and can harm your credit rating.

When you're offered the chance to apply for a credit card online, it's not always clear exactly what kind of customer a card issuer is hoping to attract. Each kind of card is aimed at someone within a range of circumstances, such as having a minimum income, being older than a certain age, or having a certain level of credit score.

In the old days, your bank manager or financial advisor would only offer you cards which you had a good chance of being accepted for, but when you're applying online there's no one but yourself to check if the card is right for you. And, seeing as how applying online is so easy, it can be tempting to just apply anyway and see if you're approved. This can be a great mistake.

Every time you're rejected for a card or other kind of finance, this fact is recorded on your credit file. If you have a lot of rejections on your file and not many acceptances, this can actually make your credit rating appear worse, making it ever harder to have an application approved. Obviously, this isn't a desirable outcome and so how can you avoid it?

The first step is to have a good hard look at the range of cards available with the features you want, whether it's a 0% balance transfer deal, a low APR or interest rate, or a great rewards program. The large number of credit card comparison sites on the internet make this a lot easier than it used to be.

Once you've got a shortlist of cards to apply for, check the small print of the one you think is the best, and make sure that there isn't anything like a minimum salary which makes it impossible for you to be approved. If everything seems okay, then take an honest look at your financial circumstances and application history, and decide whether you think you've got a reasonable chance of being approved.

Only after that should you actually go forward with your application, and you should only apply for one card at once. If your application is rejected, see if that card company offers a similar card with a higher interest rate - the acceptance criteria is likely to be looser on that card and so it may be worth applying for it.

Alternatively, you could apply for a similar card from a different card issuer. Different companies have different ways of deciding whether to approve an application, so you might have more luck elsewhere. What you absolutely shouldn't do is keep applying for similar cards from the same issuer, as the acceptance criteria will be more or less the same, and you'll just keep getting rejected, with all the problems this causes for your credit rating. At this point, you have little choice but to set your sights a little lower and apply for a less attractive card, even if this means you'll have to pay more for the convenience of carrying a credit card.