Credit Card Canada - Canadian Credit Card Reviews and Applications

5 Steps to Get a Credit Card With Low Income

Hundreds of thousands of credit cards applications are filed every day around the world, and a great deal of these applications are approved, even if the applicant has declared a somehow moderate monthly income. Given the large volume of approved applications, it should not be a problem to get a credit card if you have a low monthly income, provided that you manage to convince your credit card issuers that you will be a responsible and reliable payer.

If you already have a bad credit score, you are a risky borrower in the eyes of creditors. Don’t expect that credit card issuers will offer you their best packages. You may have to pay higher interest rate if your credit score is against you. Low income is not to your advantage either. Nevertheless, there are ways to get a credit card, and here is how you can do this.

Step One: Check Your Credit Score

Credit card issuers will definitely examine your credit score, together with your income and other relevant information. This is why it will be wise to find out what your credit score is before filing a credit card application. Big credit bureaus like Experian, Trans Union, or Equifax will readily provide you with an annual credit report for free.

Step Two: Look at Your Debt Ratio

Before starting the application process, you need to also figure out what your debt ratio is. If, for example, you make five thousand dollars per month and your expenses amount to about two thousand, your debt ratio is quite good, because you save a good deal of three thousand dollars each month. On the other hand, if you make three thousand and spend twenty nine hundred dollars per month, your debt ratio is quite high because the difference between your earnings and expenses is just a hundred dollars. So as to get a better debt ratio, you can either increase your income or cut down some of your expenses. Note that most creditors are not willing to lend money to applicants with high debt ratio.

Step Three: List Your Income

It is a good idea to list your household income. If you find it rather difficult to increase your monthly income, you can list the income of your household in your credit card application (include the total monthly income that can be used to pay off a possible credit card debt). If, for instance, your wife earns more than you, you may ask her to add her monthly income to the total household income or to co-sign for a credit card with you.
Alternatively, if you make extra cash from side jobs, you can put it in your credit card applications to boost your monthly income a bit. If you have regular freelance orders, you may include these “future earnings” in your estimated annual income.

Step Four: Pay Some of Your Debt

Cut down your monthly expenses. Before filing an application for a credit card, pay off in full or return any unnecessary stuff that you’ve bought on credit. Also, if you already have some credit cards, you may consolidate credit card debt. Transfer some of the balance of your credit cards with high interest rate to your cards with lower interest. However, you don’t have to drain one credit card to pay off another, because it simply does not look good to creditors.

Step Five: Open Account

Opening a checking or savings account is a good way to boost your credit worthiness. If you do not have a lot of free cash right now, you can put only the minimum amount in your account.

Finally, remember that filing an application online may save you time and nerves alike!