Reduce Your Credit Card Rejection Rate

Credit cards are very important form of payment in the modern day. Given the ease and comfort associated with credit card shopping, almost every store and every business today accepts credit cards. So, you can actually live out only on a credit card, without ever having to go to a teller counter or ATM machine to withdraw cash. Well, that may be a slight overstatement today, but it is still quite possible in near future. Obviously this implies that you want to apply for a credit card too. Applying for one is not as simple as filling up a form. If you are not careful, your application would get rejected. So here are some precautions that you can take to reduce this rejection rate.

photo credit: cncpt

Understand how the credit card companies verify your application: Your credit score forms an important part of their verification process. The lower your score the higher their risk and hence the lesser your chance of getting an approval.

• Understand Your Credit Score
  You can order a free copy of your credit history for free or for a small fee from the credit bureau annually. Go though your credit report and look at your ratings. If you have good ratings, it means that you have a better chance of getting an approval. If you have a poor rating, it is better to work on them before applying for a credit card. Go for credit repair first.
• Apply for Right Credit Cards
  If you already own a credit card, try to apply for a similar card from another company. If you have a healthy payment record with a particular category of credit card, your chances of getting a similar one is pretty high. Hence try to stick to your category or switch to a lower category. Sometimes going for a higher category can lead to rejection. Alternatively, you could look at secure credit cards, if your ratings are very poor. Since you secure the credit limit with a payment to the bank, the rejection rates are very low with secured credit cards.
• Take Care of Credit History
  Credit history is the most important part of your application for credit card. Unfortunately, it is not something that you can cook up, or produce overnight. It is a history of all your past payment records, missed payments, defaults, collections, etc. It is a comprehensive record of your credit related activities with records as old as seven years (though not more than that). So practice discipline in paying your loan installments, your credit card bills, etc. If you are punctual and diligent in you payments, you will have a better credit record and hence a better chance of getting approval.

Thus, you see there are many ways to improve your chances of credit card approval. Just focus on these points and you would give yourself a great chance to get a credit card approved. Typically, credit card companies don’t prefer frequent reapplications, so avoid trying to apply for a particular card  if it gets rejected repeatedly.

Effective Budgeting Practices

Budgeting is an excellent way to gain control over your income and expenses. In very simple terms budgeting is a technique of matching your income and your expenditures. Despite being so straightforward, many people don’t take it up seriously. Just noting down how much you earn and how much you spend and where you spend is enough for you to start budgeting. But it can sometimes be challenging as it can involved significant math, which is why many people shy away from it. Fortunately, there are some effective budgeting practices that you can follow that would not need any math and still give you the desired results.

photo credit: booleansplit

Budgeting Software

There are many software solutions to calculate your budgets and present it to you in a simple format. All you need to do is to input your income and expenses properly and correctly. These tools not only calculate the budget for you, they can also help you locate the trouble zone: avenues where you spend a lot, or the ones where you have recently started to spend more, etc.

You can also segregate mandatory fixed expenses like paying bills, rent, installments, etc., variable expenses like groceries, etc and the avoidable expenses like weekly movies, the 100+ channels on your satellite television that you never watch, etc.
Lastly, these tools can help you prepare your tax returns based on your inputs. This is useful when you need to pay your taxes.

Convenience Stores/ Dollar Stores

Try to maximize your exposure to these cheap stores and purchase majority of your monthly groceries from here. Many of these stores also offer you coupons that you can exchange for great discounts. Don’t be a lazy person willing to spend that $1-$2 extra to avoid tearing out the coupon or walking that extra block. You have no idea the number of items that you purchase every month. Even a $0.25 - $2 savings on these items could give you significant monthly saving.

Plan your Expense

The best way to budget your expenses and save money is to plan your purchases in advance. Every time you go out to shop, carry a list if items that you want to purchase and stick to the list as closely as possible. If would be great if you can estimate the total amount you’d be spending and carry approximately that much. This would mean that you don’t overspend. Sometimes this may be tough for you as an earning member of the family. If that’s so delegate that duty to your children. They are much better at it and they also would learn the importance of money and about budgeting.

Organize Your Bills

Budgeting is planning and good planning relies on organized data. So, make sure that you organize your bills, payment records, etc properly for easy future reference. You could use filing cabinets for these or store the soft copies in your hard drive. The softcopies are a lot easier to handle and store.

These are simple budgeting practices that will help you budget your finances properly and come up with ways of reining your expenses and improving your income.

Save Time and Money on Your Grocery Shopping & Meal Preparation

These are tough times and it requires some serious cost cutting from the families. As an important decision maker in the family you are looking at locating avenues where you can save cost. The special plans and all the frills with your television, mobile and Internet are obvious targets. You probably have also heard about credit cards and how you must pay the complete bill and all, but there are some other avenues where you can actually save a lot without making a major change in your style of living. All you need to do is follow a well designed menu plan and shop accordingly.

photo credit: j.reed

Plan your Weekly Menu – Save Time

• Lay out a plan for your next week’s menu first.
• Look at all the groceries you would need to prepare those meals.
• Go through your current stock to identify items that you already have or you can use
• Make a list of the remaining items that you need to buy.
• Go on a weekend and get all the groceries you will need for all the meals in the coming week.
• Stick to your plan and cook your meals accordingly.

This is a very simple approach that will save you time in preparing your family’s meals. If you are adventurous kind of person who likes to experiment with new styles and new dishes, plan them in advance too. If you follow cook books, it is even better as you would know exactly what to buy and how much to purchase. The above step does not limit your creativity, it only limits the number of trips you need to make to the grocery store to purchase stuff and the time you spend on deciding on the menu for the day.

Working on Repairing Your Credit

Are you looking for a new credit card, or a new loan and are finding it tough to get one? Well, you probably have your credit score to blame for. Are you someone who looks to pay the minimum payment on your credit card bills, misses the deadlines for paying your utility bills and/ or staring at huge debt. All these are impacting your credit score which why you are getting a raw deal in every line of credit. This is a cause of concern,but not a terminal problem. You can start working on your problems and turn your credit score around.

photo credit: karindalziel

If you retrospect, you may realize that the present day financial problem and credit crunch that you are facing would have started with insignificant mistakes like missing the bill pay deadline by a few days, paying just the minimum monthly requirement, etc. As they say “Little Drops of Water Make the Mighty Ocean”. You minor mistakes have now come back to haunt you. So it is intuitive that repair the credit too can follow the same trend. Correct the same insignificant mistakes and with time you could see the picture turnaround.

Budgeting

Learn to budget your monthly finances. Given that we tend to earn from limited sources and spend on unlimited ones, we know about our income and are pretty ignorant about the expenditure. This is the primary problem for the cash crunch that many face when it comes to paying bills and this affects the credit score. Take control of your finances, follow good budgeting plans and be disciplined in spending. You can save lots of money in this fashion.

Organize your Financial documentation

Working on your credit score requires meticulous planning and diligent execution. These can be best done if you have a record of all your transactions. So make it a point to collect all your bills, payment receipts, loan documentations, investment records, insurance papers, bank statements, etc and have them in a single place. Get a filing cabinet if you have to. Another alternative is to scan all these documents and maintain their softcopy on your hard drive. To be on the safer side, you could also have another copy on a jump drive that is more portable. But make sure that you don’t lose the jump drive as it contains your sensitive financial information.

Start Small

Start with simple goals like paying 40-50% of your credit card balance the in the next payment. Budgeting your banking solutions, paying your utility bills on time, etc. If you have trouble remembering the deadlines, use the auto debit/ credit services from your financial institution to ensure that your bills are paid on time. You may not see any difference for sometime with these steps, but neither did you see the present financial mess when you first paid the minimum balance on your credit card bill or missed your bill payment. These small things will add  up slowly and get you out of the credit crunch.

Review Your Credit Performance

You can order a copy of your credit report annually and analyze your performance. If you find some old lingering entries, some  unclear entries or some incorrect ones, take the initiative and write to the credit bureau requesting them to make the changes accordingly. You obviously would have to supply them with proofs for your claims. If validated the incorrect records can be removed from your history. This would help boost your score.

With these simple steps you can repair your credit and claim loans and credit cards at the best terms and conditions.