Why Is It Harder to Get a Credit Card As You Get Older?

February 14, 2019

why its harder to get a credit card as you get older

What creditors look at for older credit applicants

Things older borrowers should consider before applying for credit

Strategies to get approved as an older applicant

Perhaps you’re a cash-only person, who has never paid much attention to getting a credit card. Or perhaps you have one credit card, but want to get another or increase your current limit.

If you’re over age 50, you may find it more difficult to be approved for a credit card, even if you have an excellent credit rating. Below are some of the determining factors.

Tougher Financial Regulations

After the global financial crisis in 2008, Australian lenders became more stringent with their loan approval standards as a result of new regulations against irresponsible lending. Analysts have noted that one in five current homeowners would not qualify for their own mortgage if they were to apply today. This type of tightening was seen across the board for financial services.

Lower Income In Retirement

It can be harder to be approved for a credit card if your income reduces due to full or partial retirement. Lower income has a strong impact to serviceability. Essentially meaning, you have less money available to service all your financial commitments.

Lack of Debt or Current Credit Accounts

Aussies who have been in retirement for some time can have a quiet credit history. This can have a negative impact when lenders are reviewing applications. Essentially no credit activity can make it difficult for the lenders to assess your payment history.

Co-Signing on a Loan for a Child or Grandchild

If you have co-signed on a personal loan, car loan or mortgage for your children or grandchildren, those debts are included into your debt-to-income ratio which lenders use to determine if you can service new finance. Even if your co-signer pays on-time every month, the outstanding debt can negatively impact your chances of approval.

Type of Income

When looking at income, many lenders apply a high weighting on employment, as it is generally considered stable and predictable. Its simply more favorable than other types of income, like a pension, benefits or investment income. If income is primarily based on interest, dividends, or profits from investments, a lender may not view these earnings as reasonably recurring. This can have a impact on the outcome of new credit.

Strategies to Get Approved for a Credit Card

If you’re having trouble getting approved for a credit card, try these three options.
1. Open a store card. These are often easier to qualify for and can help you establish an active credit profile which can demonstrate a positive payment history.
2. Approach a banking institution where you already have a relationship. In addition, Credit Unions are a great option.
3. Open a secured card with a bank. These cards are often for people seeking to establish or rebuild credit. These are easier to qualify for as there is a security attached to it.
4. Open credit or make increases whilst younger and let them rollover with you as you get older.

*This article is opinion only and should not be taken as financial advice. The information is general and has not taken into account your objectives, financial situation, or needs. Check with a financial professional before making any decisions.