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June 10, 2011

  • News:  What Is The Bank Looking For? 

    Before the recession, a credit score of 720 would get you noticed. It was excellent. In today's economy, an excellent credit score is more like 750. Credit card issuers used to be eager to get their card in every hand willing to carry it, but they have become more conservative and raised the bar for approval. The FICO score takes into account the factors that credit card providers consider when determining the credit worthiness of a customer. Tara Burke, a spokesperson for Bank of America, points out each application is reviewed individually and decisions are based on the customer's stability. Additional factors, she points out, "include employment status, ability to pay and willingness to pay and FICO score." All of the top credit card providers declined to reveal the specifics of their approval standards.

    Industry experts explain the most important factor is payment history. If an applicant has a good track record of making payments on their other credit cards, they are most likely to be approved for new cards. Length of credit and diversity of credit are also important. Additionally, the debt-to-credit ratio is considered. As a general rule, banks don't want a customer to use more than one-third of their total credit lines, or more than one-third of any one cards limit. The CARD Act has limited credit cards for student. Under the new regulations, the student needs to show they have sufficient income to justify the credit line or get a co-signer. The CARD Act doesn't specify the income threshold.

    If getting approved for a credit card is still a challenge, experts recommend going to the local bank branch and talking to a real-life banker to sign up for a checking account. If a low credit score is due to a lack of credit history, the new banking relationship could be the foot-in-the-door you need to get approved for a card.

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