- Are You a Candidate for an Instant Approval Credit Card?
- Instant Approval Credit Cards for Bad Credit
- How Does the Instant Approval Process Work?
- How Do Credit Card Issuers Determine Approvals?
- Pros and Cons of Instant Approval Credit Cards
- Tips on Using Instant Approval Credit Cards
The one potentially annoying aspect of applying for a credit card is waiting days to receive a response from the credit card issuer. It takes time for the company to process your application, review your credit history, and evaluate your income and employment history to see if you’re qualified. Although this is a standard procedure with new credit applications, you may prefer a faster response time. If so, an instant approval credit card offers exactly what you need.
But while these credit cards are available, they aren’t the right match for everyone. Here’s what you need to know about instant approval credit cards.
Are You a Candidate for an Instant Approval Credit Card?
Instant approvals are convenient and might be preferred when applying for a new credit card. These types of credit cards offer on-the-spot credit approvals, with most responses arriving within a couple of minutes of sending off an application. Upon receipt of your application, a computer runs a preliminary credit check using the information on your application, such as your Social Security number. Since this involves a screening process, many instant approval credit cards approve applicants based on their credit score, rather than their entire credit profile.
Because instant approval credit cards vary, some banks that offer these cards only extend approvals to applicants with a high credit score, or those whose credit score falls within a specific range. So you’re more likely to get a card with good or excellent credit, which is a credit score of 680 or higher. This is primarily because people with good credit have a history of managing their credit responsibly. These individuals are less likely to make poor choices and jeopardize their prime credit rating, so it’s easier for them to get their hands on instant approval credit cards.
Instant Approval Credit Cards for Bad Credit
The fact that instant approval credit cards tend to cater to those with higher scores doesn’t mean that you can’t get one with bad credit. There are credit cards designed for every type of credit—good credit, no credit or bad credit.
If you’re looking to get instantly approved for a credit card, make sure you check your credit score beforehand. Get your credit score from MyFico.com, or order a copy of your credit report from the three major credit bureaus or Annual Credit Report. Knowing your credit standing is crucial because this ensures applying for the right type of credit card. For example, if you have bad credit or no credit history, you might be better off applying for an instant approval secured credit card.
Although these cards are easier to get with no credit or bad credit, secured credit cards require a cash deposit, also known as a security deposit. Security deposits can be as low as $200, or as high as $500+. The amount of your deposit determines your credit limit.
If you don’t have a lot of available cash, look for a secured credit card that allows low deposits. Also, make sure that the bank issuing your credit card reports to the credit bureaus monthly. Getting a secured instant approval credit card can be a steppingstone to establishing good credit. As you make timely payments, your credit card issuer will report this positive activity on your credit reports.
But while an instant approval credit card for bad credit can help build your credit score, you might pay a higher interest rate due to your low credit score. Pay off your credit card balance in full every month to avoid exorbitant interest charges.
How Does the Instant Approval Process Work?
You might ask yourself, how does the instant approval process work? If you’re applying online, be prepared to provide your personal information. This includes your name, birthdate, Social Security number and your income information.
Based on the information you provide, the computer runs a preliminary screening to see if you meet the basic requirements for the credit card. Since these requirements vary by bank, it’s important that you understand the issuing bank’s approval guidelines before completing the application. Read the fine print of the application carefully, or contact the bank if you have any questions. Be sure to enter your information accurately on the online application. Errors or mistakes can delay an approval or result in a rejection.
Once you submit your application, expect a response within a couple of minutes. An instant approval comes in handy when you’re applying for credit with an online retailer. If you’re approved for instant credit, you can typically charge purchases to your account immediately, although it can take up to a week to get your new card in the mail. With an instant approval credit card, your credit limit is usually based on your credit score at the time of approval.
There’s one caveat, however. Depending on the card and the issuing bank, some instant approvals are conditional. The credit card issuer may initially approve your application because your credit score was within the minimum range for an account. But sometimes, banks conduct a more thorough review of an applicant’s credit report before mailing a credit card. And in some cases, a credit card company may decide not to issue a credit card to a recently approved applicant, or the company may lower an applicant’s credit limit. This could happen if you have a high percentage of outstanding debt for your income level.
How Do Credit Card Issuers Determine Approvals?
If you don’t understand the criteria for being approved for a new credit card, you might be surprised if a bank rejects your credit application. Understanding a bank’s process for approving or rejecting an applicant can help you prepare for the application.
- Length of your credit history. Credit card issuers review the length of your credit history when determining whether to approve your application. Some credit card issuers only offer cards to those with an established credit history. If you have a short credit history or no credit history, only apply for cards designed for people with bad credit or thin credit.
- Types of credit accounts. Additionally, credit card issuers also evaluate your credit mix to gauge whether you’re a good candidate for a credit card. Diversifying your credit can boost your credit score because there’s evidence of managing different types of financing. But while diversifying is a positive thing with regard to credit, a credit card issuer may not approve your application if you already have several credit card accounts in your name, or the bank may assign you a lower credit limit to reduce their risk.
- Credit utilization. Your amount of outstanding credit card debt also impacts whether you’re approved for a new credit card. Too much revolving debt is dangerous because there’s a higher risk of default. Even if you have good credit, a bank might not approve you for a new credit account if you have several credit cards with high balances. Before applying for an instant approval credit card, pay down existing accounts and don’t max out your cards. Keep your credit card balances below 30% of your credit line.
- Late payments, collection accounts, and judgments hurt your credit score, and these negative items can make it difficult to get approved for a new credit line. Prior to applying for any new credit, check your credit report for mistakes like a late payment or a collection account reported in error. Dispute these mistakes to have erroneous information deleted from your credit report
- Recent hard inquiries. Checking your own credit report doesn’t hurt your credit score. However, each credit inquiry from a new credit application can lower your score, reducing it by two to five points. Don’t apply for too many new accounts in a short span of time. If possible, only apply for a new credit one to two times a year, and at least six months apart.
Your income. Credit applications may also ask for your annual income. This information helps credit card issuers assess whether you’re capable of taking on new debt.
Pros and Cons of Instant Approval Credit Cards
- Get a response in minutes. It only takes a couple of minutes to complete an online form, and you can usually get a response within five minutes of sending off the application.
- Available for different types of credit. Although some instant approval credit cards are designed specifically for people who have good or excellent credit, you can also find instant approval credit cards for people who have bad credit or no credit. Read the fine print on applications to ensure applying for the right card for your credit situation.
- Safe online application. You might be leery about inputting your personal information into an online form. However, to be instantly approved for a credit card, you must provide your Social Security number. Keep your information safe by only applying for credit with a reputable credit card company. Also, only submit an online application if the website features security logos. This ensures the safety of your private information.
- Save money on purchases. If you apply for an instant approval credit card in a retail store, you can sometimes save 10% to 20% on your purchase, if approved. While this can result in nice savings, don’t forget that each credit inquiry lowers your credit score. With that being said, don’t get into a habit of applying for instant credit at checkout. Only apply for new credit if you’re looking to open a new account.
- You don’t get the card immediately. Unfortunately, even if you’re instantly approved for a credit card, it can take up to a week or longer to get the actual credit card in the mail.
- Instant approvals are sometimes conditional. The credit card company issuing your credit card could later reduce your credit limit from the amount you were initially approved for, or send a letter stating that the company can’t offer you a card after a review of your credit.
Tips on Using Instant Approval Credit Cards
Before applying for instant approval credit cards, here are a few tips to remember.
- Always read the fine print. Before submitting an application for a credit card, make sure you read the fine print and understand the card’s benefits. You’ll find information about minimum requirements for the card, as well as information on interest rates, annual fees, foreign transaction fees and other costs associated with the card. Compare interest rates and fees before choosing a credit card to lower your out-of-pocket costs.
- Improve your credit before applying. Adding points to your credit score can boost your odds of being approved for an instant approval credit card. A higher score can also help you get the lowest interest rate possible. To increase your credit score beforehand, continue to pay your bills on time and pay off as much consumer debt as possible.
- Only apply for a credit card if you’re in the market for one. Applying for too many credit cards can result in numerous inquiries on your credit report, which can ultimately lower your score. Only apply for credit when necessary to avoid damaging your credit.
- Pay off balances in full. A credit card is convenient and flexible, but it can also be a financial nightmare if you ring up too much debt. As a rule of thumb, never charge more than what you can afford to pay off in a given month. Set a monthly spending limit, and monitor your credit card charges throughout the month to avoid going overboard.
Never lend your credit card to someone. You’re responsible for all charges on your credit card (unless the card is lost or stolen). If you give someone permission to use your credit card, and this person later refuses to pay up, you’re liable for the bill. Always keep the card in your possession, and don’t lend your credit card to anyone.
If you don’t want to wait several days to learn whether a credit card issuer has approved your application, instant approval credit cards can provide a fast, immediate response. Just make sure you understand the credit card requirements before applying, and take steps to improve your credit score to ensure you receive the most favorable terms.