Not just anyone can get a credit card. In fact, credit cards often have several requirements you must meet to apply. These application requirements are what we’re covering today. Continue reading to learn more about eligibility requirements for credit cards in Canada.
Applying for a credit card
Anytime you submit a credit card application, you are putting in a request to access credit. This is no small thing. In fact, applying and being approved for a credit card is similar to applying and being approved for a loan. It is a serious financial responsibility, and by approving your application, the credit card issuer agrees to take on a certain degree of risk. For this reason, they must do their due diligence and ensure that you can pay the money back that you borrow. One way of doing this is by making a list of criteria that potential borrowers need to meet in order to be eligible for a credit card. When applying for a credit card, prospective borrowers must read through these requirements and make sure they meet them. Ultimately, this is how you demonstrate to the issuer that you are a responsible borrower.
Credit card application requirements vary by issuer and financial institution. They also vary by card, with some credit cards having stricter requirements than others. When you apply for a credit card, an issuer may require the following:
- Your basic personal information (your legal name, date of birth, social insurance number (SIN), and home address. You may be required to upload a photo of a piece of personal identification, such as a passport or driver’s license as proof. Please note that most credit card issuers will not issue credit cards to borrowers under 18 years of age.
- Your employment status (your current job(s) and the length of time you’ve worked there)
- Your monthly income, broken down by sources
- Details of any other credit cards you currently have
- Details of any other debts or monthly payment obligations you have, such as a mortgage loan or car loan
In addition to the details above, a credit card issuer will certainly want to review your credit score and credit history. As part of the credit card application process, you will likely be asked to grant the issuer permission to run a background check with a credit-reporting agency (Equifax and TransUnion are two of the largest credit-reporting agencies in Canada). As part of this background check, the agency will provide the credit card issuer with a copy of your credit score. The better your credit score, the better your odds of being approved for a credit card. Credit scores range from excellent to bad (exact score categories vary by financial institution):
- Excellent: 760-900
- Very good: 725 – 759
- Good: 660 – 724
- Fair: 560 – 659
- Bad: Below 560
Beyond the requirements mentioned above, some credit cards have minimum income requirements. In essence, to be eligible for certain credit cards, you must make above a set amount of money each year. A high income is taken as an indication of financial responsibility. As such, the higher your income, the more credit cards you’ll have access to. In this vein, you are also likely to be approved for a higher credit limit. For example, the TD First Class Travel Visa Infinite has a minimum income requirement of $60,000 (or $100,000 in household income).
