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What can I substitute for credit history when applying for a credit card?

[Wednesday, November 24th, 2010]

Credit history is very important in applying for credit card accounts. The information that your credit history reveals is used by your bank or card issuer in determining whether or not to approve your application for a credit card.

The importance of the credit history cannot be overstated as it unearths facts about a cardholder’s existing loans and other costs incurred and whether these are paid responsibly on the due date. Other implications of not having a credit history is an individual’s difficulty in availing of other credit card services, paying off on electricity and phone bills, renting an apartment, and even looking for a job.

In applying for credit cards, you should make sure that you have an alternative to credit history. Such an alternative can be a bank account. In applying for a credit card, it is wise to open a checking or savings account as soon as possible, given that you do not have a credit history.

Bank accounts successfully opened will show a degree of financial stability on your part and the credit card issuers will be glad to know about that. You just have to make sure that even if you have already have a bank account, the checks you issue and receive do not bounce, you retain as much money as possible without withdrawing very arbitrarily, and you’ll never incur overdraft charges.

The bank account can then be alternatives to the credit history since what the card issuers need for them to lend credit is an idea of your sense of financial management as a borrower. With at least a bank account to substitute for your credit history, the card issuers will check your payment capacity and whether you can sustain your use of credit cards well enough in the long run.

There can be no other standards by which the banks measure your entitlement to a credit card aside from an evaluation of your payment capacity. Should they reject you from availing of other credit facilities, the banks are expected to fully inform you with an explanation of their decision. Other factors that might be considered by the banks are your employment history and stable income statements. Proof of a good employment record as well as a credible financial capacity over the past year can also support your application if you don’t have a credit history.

You must make sure then that as a credit card account applicant, you have stayed long enough in your job to have earned you a stable source of income to pay off credits once you have credit card.

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