Who Can Use Credit
When you apply for credit, you need to consider your borrower profile — that is, how you appear as a borrower to potential lenders. Typically, lenders look for borrowers who:
- Are over 18. In some cases minors can be extended credit as an authorized user or joint account holder on an adult’s account.
- Have capital in another checking or savings account, showing the ability to maintain healthy cash flow and reserves and to make on-time payments on a loan or credit line.
- Have credit capacity, meaning that the amount of unused credit available is in good balance with the amount of current debts.
- Display good credit character, which is shown in a credit report as on-time payments and paying off debts to other creditors.
- Possess collateral that can be used to offset the lender’s risk in case of nonpayment (this applies more to business, home and auto loans, not credit card issuers).
- Have stable life conditions such as steady income, employment and a reasonable debt load, increasing the likelihood of paying off debts.
Even if you have had previous credit issues, your lender may overlook these if you can show that you are working through them. This is especially important when you are working to repair credit after a bankruptcy or if you have been a victim of fraud or identity theft.