When you apply for a credit card, there’s a good chance that the issuer will ask you to supply your income, your employment status, and other pertinent details about your finances. When it comes to credit card issuers determining whether to approve your application and how much credit to extend you, there are many more factors than just your employment status and what you earn each year. What factors does the credit card issuer consider?
1) Income
According to the experts at SoFi, most institutions determine the average credit card limit by income. So if you’re a recent college grad with no full-time job or if you have a high debt-to-income ratio, it’s unlikely you’ll get approved for an extensive credit line. But if you have stable employment and a good income, you might be able to qualify for $10,000 or more.
2) Employment History
Employment history, both recent and long-term, can be a crucial factor in determining credit limits. If you’ve had multiple jobs within a short period or held several positions over an extended period, it may negatively impact your ability to obtain high credit limits.
3) Assets
The total value of all your possessions—anything from personal property to real estate holdings—is used by issuers when calculating your credit limit. While some card companies don’t consider assets, others will increase or decrease their offers based on what you own.
4) Length of Employment
The length of time you’ve been with your current employer depends on how much credit card limit you can get. Credit card issuers generally want to see at least two years of employment before offering consumers higher limits.
5) Recent Credit Inquiries
Lenders will also look at your recent credit inquiries to gauge your level of spending and your willingness to take on more debt. If you’ve recently applied for several cards, it could have a negative impact on your credit limit.
6) Major Purchases
New furniture, a vehicle, a computer – when you make major purchases on credit, they’re recorded in your credit history. So the more major purchases you make on time and within your credit limit, the stronger your credit score.
7) Payment History
This is one of the most important factors when determining credit limits. When you pay your bills on time, it shows lenders that you’re responsible for your credit card use. You may be eligible for higher limits as a result.
8) Credit History
The length of your credit history is a crucial factor in determining what your credit limit is. It can show how responsible you’ve been with managing and handling debt, reflecting how you might use any card offered to you by an issuer.
Start with your credit score and payment history. They have a massive impact on whether you can get approved for a credit card and how much of a limit you’ll be able to get.
