When you’re not sure if you’ll be approved for a new credit card, the process can be stressful. No one wants to deal with the pain of being turned down, but there’s more at stake than just your pride.
The credit card company will usually do a hard inquiry on your credit report every time you apply for a credit card. These hard inquiries can lower your credit score by a few points and stay on your report for up to two years. Too many hard inquiries in a short amount of time can hurt your creditworthiness, so it’s important to know your chances of approval before you apply.
This is when the Approval Odds feature on Credit Karma comes in handy. It tells you how likely it is that you will be approved for a certain card, which could keep you from having to go through unnecessary hard inquiries and the damage they can do to your credit score.
How Do Credit Karma Approval Odds Work?
Credit Karma Approval Odds are personalized estimates based on your unique credit profile. They are provided as recommendations to help you choose which cards to apply for, not as guarantees of approval.
When browsing credit cards in the Credit Karma mobile app, you’ll see a star with a checkmark and your Approval Odds shown below each card image. The odds range from “outstanding” to “poor,” indicating the probability of your application being approved.
Why Approval Odds Don’t Guarantee You’ll Get Approved
Even with “outstanding” approval odds, it’s important to remember that credit card issuers, not Credit Karma, have the final say on approvals. You may not get approved for the following reasons:
-
Different Credit Scoring Models: Credit Karma uses VantageScore 3.0, which can differ from the model used by the issuer. This discrepancy can lead to variations in your perceived creditworthiness.
-
Unique Credit Factors: Different factors are taken into account by scoring models, and they are weighed in different ways. Even though your scores may be the same across models, the things that made them that way may not be the same.
-
Additional Considerations: Issuers look at more than just your credit score, like income, employment history, and current debts. These can influence their decision even if your score seems favorable.
What to Do If You’re Not Approved
Getting denied for a credit card can be frustrating, but it’s not catastrophic. Here are some steps to take:
-
Don’t Panic: While the hard inquiry may temporarily lower your score, a denial won’t further damage it. The impact is usually small and improves over time.
-
Review Credit Reports: Verify all information is accurate. Dispute any errors immediately.
-
Improve Credit Utilization: Aim to keep it below 30% of your total available credit limit.
-
Make On-Time Payments: Paying bills on time and in full is critical for maintaining good credit.
-
Consider Reconsideration: If you think the issuer made a mistake, call their reconsideration line to plead your case.
Building Your Credit to Boost Approval Odds
The best way to increase your chances of approval for future credit cards is to build and maintain good credit. Here are some tips:
-
Make on-time payments every month – it’s the most important factor.
-
Keep credit utilization low, ideally below 30%.
-
Limit new credit applications in a short timeframe to avoid too many hard inquiries.
-
Become an authorized user on someone else’s account to benefit from their good payment history.
-
Regularly check your credit reports and dispute any inaccuracies.
How Credit Karma Approval Odds Can Help
The Credit Karma Approval Odds provide a useful benchmark for gauging your chances of being approved for a particular credit card. But keep in mind they aren’t guarantees, and the issuer may consider other factors too. You can boost your real-world approval odds by understanding how approval odds work and taking steps to build your credit.
Frequently Asked Questions
Does applying for a credit card through Credit Karma hurt your credit score?
Submitting a credit card application generates a hard inquiry on your credit report, regardless of whether it’s done through Credit Karma or elsewhere. So yes, applying for a new card can cause a small temporary drop in your credit scores.
How does Credit Karma provide free credit scores?
Credit Karma offers free credit scores by partnering with credit bureaus Equifax and TransUnion. They receive compensation when you use Credit Karma recommendations to apply for financial products, allowing them to provide the scores for free.
Are Credit Karma’s credit scores accurate?
The scores shown on Credit Karma come directly from TransUnion and Equifax. They accurately reflect your credit data as reported by those bureaus but may differ from scores used by lenders.
Is there any risk in using Credit Karma?
Credit Karma is a legitimate service that provides credit information that is generally accurate and similar to your FICO scores. However, lenders may use slightly different scoring models, so your real-world results could vary.
Can checking my score on Credit Karma hurt my credit?
Checking your credit scores on Credit Karma does not hurt your credit because these soft inquiries don’t impact your scores. Only hard inquiries from applications for credit can lower your scores.
How do Credit Karma Approval Odds compare to my real approval chances?
While useful guidelines, Approval Odds don’t guarantee your application results. Credit card issuers make approval decisions based on additional criteria beyond your credit scores. Your actual approval odds may differ.
Should I rely on Credit Karma when applying for a new credit card?
Credit Karma provides helpful information, but keep in mind lenders likely use different scoring models. Use Approval Odds as a starting point, but don’t assume approval is guaranteed even with excellent odds shown.
Can I comparison shop for cards on Credit Karma without impacting my scores?
Yes, you can browse cards on Credit Karma to get an idea of what’s available without any hard inquiries being generated until you formally submit an application. This allows you to comparison shop without hurting your credit.
If I’m not approved for a card, when should I reapply?
If your application is denied, wait at least 6 months before reapplying for the same card. In the meantime, focus on improving your credit by paying bills on time, lowering balances, and correcting any credit report errors. This can boost your chances for the next application.
Checking your Approval Odds on Credit Karma is a useful starting point when applying for a new credit card, but it shouldn’t be the only factor in your decision. Consider your overall credit profile, likelihood of approval, and whether the card is a good fit. With some savvy comparison shopping, you can find the right card without unnecessary damage to your credit.
Here’s why there may be credit score differences between what you see on Credit Karma and elsewhere.Updated Thu, Oct 31 2024
On Tuesday afternoon, consumers took to Twitter to express their frustration over their credit scores on Credit Karma, the personal finance company owned by Intuit.
The issue for most wasnt that the credit scores they were finding on the Credit Karma website were low—rather they were too high.
Consumers tweeted about going to apply for a credit card or loan thinking they have good or excellent credit, only to soon find that the credit score that the card issuer or lender pulled was lower than what they saw on Credit Karma.
The specific tweet that started off the conversation can be found here. Twitter users were quick to follow up and joke about how inflated their credit scores looked on Credit Karma.
But they were on to something important when it comes to checking your credit score.
Below, CNBC Select breaks down why you can expect your credit scores to differ, depending on where you check them.