For most Australians, there are no major hurdles to applying for and getting approved for a credit card. Comparing credit cards to learn more about their eligibility criteria might give you a better idea of how easily your credit card application can be approved.
What are the eligibility criteria for a credit card?
Different credit card companies will have different requirements to qualify for their credit cards. Some of the points they may consider when assessing your application include:
Age and residence
You must be at least 18 years old to apply for a credit card in Australia, and most require you to be an Australian citizen or permanent resident. However, some credit cards are available for temporary residents.
Most credit cards have minimum annual income requirements. Make sure you apply for a card where you meet the minimum.
Some premium credit cards that offer access to points and rewards programs are more likely to have higher annual income requirements than more basic credit cards.
Your credit score is used by lenders to quickly assess the risk of lending you money or offering you credit products. If you have a habit of successfully borrowing and repaying loans and bills on time, you are more likely to have good credit. But if you have missed payments or defaulted on your credit history, you are more likely to have bad credit. You can check your credit score for free to get a better idea of how lenders may view you.
A bad credit score isn’t the end of your credit card application, but it can prevent you from being approved for a higher credit limit. If your credit score isn’t perfect, consider applying for the credit limit you need, rather than the one you want. You may also consider taking time to improve your credit score before applying for a credit card.
How to apply for a credit card?
The exact process for applying for a credit card can vary depending on the type of card and the credit company issuing it, but it generally involves following these steps:
- Complete an application form (online, by phone or in person)
- If your application is conditionally approved, the credit grantor may request additional information to verify your application, such as identification documents, bank statements, payslips, etc.
- If approved, your card will be sent to your address
- Activate your card and start using it
Should you ask for more from a credit card?
Having more than one credit card available could add extra flexibility to your household finances. However, it could also jeopardize your credit score and your future credit prospects.
Depending on your household income, expenses, and other financial factors, having multiple credit cards or a higher credit limit could increase your risk of taking on more debt than you can comfortably afford. This could increase the risk of missing repayments, which in turn could affect your credit score.
When applying for credit products such as car loans or mortgages, lenders may want to know the total credit limit on your credit card(s). These lenders can assess your application assuming a “worst case” scenario, to see if you can still afford the repayments if you’ve exhausted your credit cards and are paying interest on their full balances. This could make it more difficult to approve future loans.
Plus, applying for more than one credit card at a time can risk torpedoing your credit score. Multiple credit card applications mean multiple lenders will check your credit history, all of which will be recorded on your credit file. It can make you look like you’re in desperate need of financing and have trouble managing your money, which could lead to rejected applications and a lower credit score.