How to Attract Creditors When Sending a Credit Card Application

Have you ever wondered why some people are able to get credit cards with unlimited credit? What about the prestige building American Express Black Card? Or what about the Visa Gold Card? How do you get one of those cards? Well, the first question you should ask yourself is what are creditors looking for. When you get the answers to those questions, you can start positioning yourself for one of those prestigious credit cards.

The Three Credit Card Variables

Credit card companies break what they are looking for down to three primary variables: Capacity to pay, Character of the debtor, and Collateral provided. Let's look at the Three Cs more closely.

• Capacity. Put simply, can you repay the debt? Creditors ask for employment information: your occupation, how long you have worked, and how much you earn. They also want to know your expenses: how many dependents you have, whether you pay alimony or child support, and the amount of your other obligations. They take that information and decide what kind of credit card you qualify for. So basically, the better your reputation, the better for your chances.
• Character. Will you repay the debt? Creditors will look at your credit history. They will look at how much you currently owe. They will look at how often you borrow money. They will look at how often you pay your bills and whether you pay them on time. They will also look at how often you max out your credit cards. All of these questions will have to be answered to determine if you are a good credit risk.
• Collateral. Is the creditor fully protected if you fail to repay? Do you have the assets to cover the credit card bills if you default? Did you use a co-signer when applying for the credit card?

What Credit Card Companies Can not Take into Account

The Equal Credit Opportunity Act does not guarantee that you will get credit. But it does guarantee that your credit card application will be judged impartially and fairly. The credit card company, for example, can not take into account your race, age, gender, marital status, religion or national origin. But you still must pass the creditors' tests of creditworthiness. The act also bars discrimination because you receive public income, such as veteran's benefits, welfare or social security, or because you exercise your rights under federal credit laws, such as filing a billing error notice with a creditor. This protection means that a creditor may not use any of these grounds as a reason to:

• Discourage you from applying for a loan
• Refuse you a loan if you qualify
• Lend you money on terms different from those granted another person with similar income, expenses, credit history, and collateral
• Close an existing account because of age, gender, marital status, race, color, religion, national origin, receipt of public income or because you exercise your rights under federal credit laws.

Exceptions to These Credit Card Rules

There are a few exceptions to these rules however. For instance, a credit card company may ask your age. But that information can only be used to determine that you are of legal age to sign the credit card application. If you are of legal age (18 or 21, depending on the state), the creditor can not turn you down based on your age.

Federal law does allow credit card companies the right to consider certain information "related" to age. For instance, how long until you retire or how long your income will continue. An older applicant might not qualify for a large loan with a very low down payment and a long term, but might qualify for a smaller loan, with a larger down payment, and a shorter term. Remember that although declining income may be a handicap if you are older, you can usually offer a solid credit history to your advantage. The creditor has to consider all the facts and apply the usual standards of creditworthiness to your particular situation.