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Last year’s launch of the Chase Sapphire Reserve credit card proved a smashing victory for cardholders — and helped fuel a war of one-upmanship among issuers looking to attract new, wealthy customers.
Tens of thousands of people applied for this particular rewards card in the first couple of days following its August 2016 introduction, lured by a enormous bonus and travel benefits. Its450 annual fee did not prove to be a barrier.
But, though lots of people have jumped to catch one of these cards, not everyone can qualify. A Chase spokeswoman says the company doesn’t disclose minimum credit rating, income or ability-to-pay requirements.
Data available through online forums and credit experts suggest that premium rewards credit cards simply go to consumers with good to excellent credit scores.
If your credit score is not top-notch, consider a fundamental cash-back credit card, which may be more widely available.
Brian Riley, manager of the charge advisory service for payments research and consulting company Mercator Advisory Group, states the minimum credit rating for a premium rewards card is between 680 and 700 you need. Cards from American Express often get a minimum threshold of 700 to 720.
“There are different things that may make you fumble on the way, though,” he says.
More than your credit score issues
Your credit rating is one consideration that card issuers consider when deciding whether to extend you credit. There is a “means test” that all issuers put you through during the application process which looks at other things, as well, Riley says.
A thread on the social network Reddit that’s dedicated to the Chase card states there are a lot of factors which are taken into account when Chase determines whether or not to approve you, including but not limited to:
Credit score.Income.Number of accounts currently opened.Average era of your accounts.Number of recently opened accounts.Derogatory marks in your report.Total credit limit across all banks.Total credit limit with Chase Bank.Age of your connection with Chase.Total credit utilization ratio.Average credit limit utilization ratio.
“And even if we knew all of this about you, we still don’t know how Chase weighs each of these metrics for this card (or some other),” Reddit states.
Chase has another unpublicized requirement that cards don’t. The company will not approve a card application if you have opened five or more new credit card accounts in the past 24 months.
But for all top-tiered reward cards, the magic that goes into deciding who doesn’t — and who receives one is actually known by few.
Starting with a good credit score probably won’t hurt.
Who gets credit?
The credit bureau TransUnion discovered that during the first quarter of 2017, 171 million consumers had a credit card. But just 9.5 percent of these cardholders had subprime — below 600 — credit scores.
While few consumers are rejected for credit cards — the Federal Reserve Bank of New York set the rejection rate at 17.7 percent in February 2017 — borrowers with poor credit scores face a tougher challenge. Applicants get approved according to the Consumer Financial Protection Bureau.
Yes, scores matter.
In fact, an investigation of credit card information shows the 1,197 people who were approved for the Sapphire Reserve card’s average credit rating was 767 at the time of application.
You might get a credit card — or some other top-tier rewards card — if you get rejected for the Chase card. It may not be the one you want.
“They wish to book accounts, but they may not necessarily want to send you that Reserve card,” Riley says.
Your pre-application checklist
If you think your credit is pristine or a bit damaged, everyone who plans to apply for a credit card must answer a few key questions about themselves and their targeted card first, says Paul Golden, the director of media relations for the National Endowment for Financial Education.
First, check your credit report. The three major bureaus enable you to pull your report once a year. Stagger it throughout the year so that you can check one report every three months, Golden says.
“We should all be checking our charge and we should all know what our score is,” he says.
When you begin searching for a specific card, Golden says, analyze these variables:
Monthly, can you realistically pay your bill? (This is a requirement that card issuers must determine.) Is the interest rate too high?Do you know the fees and penalties?Is there an annual fee, and if so, is it worth it?What does the card fee for balance transfers and cash advances?Is there?
In case you’ve got a borderline credit rating, you might find that cards using low interest rates are much better than cards that provide cash or miles back, Golden says.
“The card that provides the best benefit may not be the card that provides the best rewards,” he says.