What Elements Does a Credit Card Issuer Look at When Extending Credit?

• Most credit card issuers look at outstanding debt amount. Buena Vista Images/Stockbyte/Getty Images

  Most people will choose to open a credit card account at some point in their lifetimes. It might be because they don't want to purchase the desired item in cash, or because they want to receive a credit card discount. No matter the type of credit card, a credit card issuer will review several aspects of the applicant's financial history. If you plan to try to get a new credit card or request a credit limit increase on a current card, be aware of what they'll be looking for.

Current Credit

• Most credit card issuers will look at your current credit accounts to decide if they will extend a new line to you. They typically look at the unused portions of your current credit lines to see if you have a history of overextending yourself. They will also look at how many credit lines you have, as well as what types of credit they are. Some creditors are even looking at how you use your credit cards to assess if you would be a potential risk to them. According to a New York Times article, a Canadian credit card company discovered that consumers who regularly used their credit cards at drinking places, or bars, were more likely to be delinquent on payments than consumers who used their credit cards at dental offices. Many credit card issuers also consider how long you've had your current credit card accounts -- you'll receive higher scores for long-held accounts.

Bill-Paying History

• Creditors will typically look closely at your bill-paying history. This is why it's so important to pay your bills on time each month. They assess your overall payment history, which also includes late payments on rent or utility bills. Credit card companies see if any of your overdue accounts have gone to collection agencies. According to the Federal Trade Commission website, it can take up to seven years for negative information to be deleted from your credit report -- if it is accurate. Check your credit report before you apply for a new card to ensure that everything is accurate. If the credit file has incorrect information, it could be preventing you from attaining new credit cards or low annual percentage rates on new cards.

Debt

• Your outstanding debt will be considered when credit card issuers consider your application. Debt is usually perceived in two ways -- how much you have overall and what your debt-to-income ratio is. This means that you may be denied a new card even if you have a high salary and a good credit history but also have a high level of debt. Those with low credit debt but who do not make that much money may also be turned down.