What Credit Checks Are Done For a Credit Card Application?

A credit card application is a very common financial activity, and credit card companies are well versed in dealing with these applications. As part of the process, the company will order a basic credit check for the borrower in question, which yields pertinent financial information and shows the FICO score, the common credit score referred to by many financial institutions. This credit check is one of the most important parts of the application, but even borrowers with bad credit can often find a way to get cards.

Credit Checks

Credit checks for FICO scores and other basic information are relatively the same. The most important factor is a soft check versus a hard check. A soft check is conducted for only basic information and rarely affects the credit score it. A hard check is more detailed and is the type of check required for a credit card application, and has the potential to drop a credit score by a few points. Multiple credit card applications will drop scores even further and make getting credit unlikely.

Factors in Credit Check

A credit check looks at several basic credit factors. The actual calculations to create the FICO score are protected and what credit card companies look at in the credit report can vary, but both past and present accounts play a factor. Present account balances are very important, and credit card companies prefer to see a history of payments made reliably and accounts that have been held for several years but have incurred relatively few late fees.

Other Factors

Credit card companies will not only search for credit. Borrowers also give income information in their application that can help them qualify for cards. Of course, income levels will not be as important to the companies as the credit history, and may not have as much of an impact as they would in a mortgage application, but they do play a part and may be able to tip the scales.

"Bad Credit" Cards

Most credit card companies offer a selection of "bad credit" credit cards, cards that are available even if borrowers only have minimal credit scores or little credit history. Sometimes credit companies do not even run a credit check at all for these cards. However, they come with a cost. These easy-to-get cards come with very low balance limits and very high interest rates, which can put an extra burden on borrowers.