Instant decision credit cards let you understand whether you'll get the credit you need instantly.
Why would I want an instant decision credit card?
There are many good reasons why you might want an instant response to your credit application, including:
You have a short term opportunity to save money by purchasing early
You're time poor and need to arrange your finances quickly
You've forgotten that your existing 0% transfer deal is about to expire, and you want to avoid paying interest
However, there are also bad reasons for wanting to borrow quickly, including:
To make payments on other borrowings, because you're over-indebted
To quickly exploit identity theft by getting credit in another person's name - Fraud
Despite the risks, some lenders are willing to offer quicker access to credit. However, in order to distinguish between applications with good intent, from those that are ill-informed or malicious, credit card issuers need sophisticated processing systems.
What are instant decision credit cards?
Instant decision cards are not distinctly different from traditional credit cards. In fact, there is a lot of overlap between credit cards offering instant decisions, and cards in established categories like bad credit, balance transfer, 0% purchase, and rewards. However, though many card applications will now offer decisions instantly (within 60 seconds), not all do. So, what makes instant decision cards different?
Although the specific criteria (scorecard) by which applicants get assessed differ from issuer to issuer, the processing of credit applications is broadly similar. Lenders match data that applicants have completed in their application form against third party sources (credit files). With this (and sometimes proprietary data) they calculate the risk profile of applicants to decide what (if any) credit they can extend. What makes issuers of instant decision products different to other lenders, is not how they arrive at the decisions they make, but the automation of the process itself.
How do credit card issuers make instant decisions?
The process required for making instant decisions starts before you have even submitted an application.
Fields within the online application forms restrict the format of applicants responses.
Your title must be Mr, Mrs, Ms, Miss or Dr
The format for your date of birth is specified
Your address is prefilled based on your house name/number and postcode
Your residential and employment status must be selected from a limited number of options
Undoubtedly, this makes forms quicker and easier to complete, but it also ensures that application data is collected in the format necessary for more rapid processing.
With data standardised in the optimal processing format, credit reference agencies (contacted by your prospective lender) can quickly identify and return credit file(s).
Credit files offer detailed and impartial information regarding your credit history and financial status, and it is this information that is used in algorithms credit card issuers use to automate instant lending decisions, enabling them to make rapid (instant) decisions.
What are the benefits of instant decision cards?
Instant decision products are available in numerous credit card categories, so particular benefits vary considerably. Some cards might offer extended 0% periods on balance transfers and/or purchases, whilst others offer attractive reward schemes, or a useful platform for rebuilding a bad credit score. However, given that other products within a category are likely to provide similar features, the unique benefit these cards offer is the speed of decision.
This does not mean that you are any more likely to be approved for an instant decision card than for another credit card. In fact, automating decision-making can reduce your likelihood of acceptance, since there is no human oversight to help rectify 'silly mistakes' or grasp the wider context of credit record anomalies. However, it does mean that applicants instantly know whether they'll get a credit card, and can plan their next course of action accordingly.
Can I get an instant decision credit card?
If you meet the card issuer’s eligibility and credit score requirements, then yes. However, it's worth remembering that algorithms use strictly defined rules and take data at face value. Mistakes in your application form can result in you getting declined instantly, so it's essential you complete your application form accurately.
Ideally, you should gather all the details you might need before starting the application form.
Address Not just your current address, and how long you have lived there, but also previous addresses and how long you lived at each. Aim for at least three years’ worth of address data
Expenditure data This will include estimates of your monthly/yearly spending on loans, mortgages and other monthly commitments you have made (e.g., mobile phone contracts). You should also be prepared to answer questions about any dependents you may have
Income data Prospective lenders will want to understand what level of income you have to service your debts - This could include your salary, benefits or other dependable income
You may also be asked whether you expect your income to change imminently (e.g., you know you about to lose your job or have a particular benefit withdrawn/reduced).
If you are employed, you may be asked to supply details of your current employer, including their address - which may not be your place of work.
NB. Providing false information on an application form is fraud, which is punishable with a criminal conviction - so answer as honestly as you possibly can.
What should I do if I'm instantly declined?
It can be disappointing and frustrating to get rejected within 60 seconds of application, but what should you do? Well, until you've got a better understanding of why, you shouldn't rush to make another application. Multiple applications (which all show on your credit report) infer that you are in financial distress and reduce your chances of being accepted for credit in the future.
Before applying again, you need to understand any reasons why you might have been declined, and take steps to rectify the issues. Some issuers will offer guidance on this, so it is worth giving them a call before doing anything else. However, if they can't (or won't) answer your questions, you should get your credit report(s), ideally, from the credit reference agencies used by the issuer who has rejected your application.
Check your credit files for mistakes and/or entries that are likely to concern potential lenders. These might include:
Multiple credit applications
Excessive available credit
Financial associations with people who have poor credit
NB. It is worth checking your credit files regularly to guard against identity theft and fraud. Actions fraudulently undertaken in your name will appear on your credit file and will harm your credit score, until you report them and arrange for their removal.
Another tip if you've been rejected is to look for cards offering a soft search eligibility check before a full application available. These tools use credit reference agency data to calculate your likelihood of being accepted, and, crucially, they do not leave a mark on your credit file, so they do not harm your chance of getting credit in the future. Unfortunately, being accepted via a soft search does not absolutely guarantee that you will be accepted, but it can help you avoid making full applications that are certain to fail.
Can I get an instant decision with no credit check?
No, not if you want to borrow from a lender that operates within the law. UK lenders are required to 'Treat Customers Fairly', and not burden them with unsustainable levels of debt. To know what is sustainable, prospective creditors need to understand your current levels of debt, and the only way they can reliably get this information is from your credit files.
Yes and no. Instant decision issuers can auto-decision the vast majority of applications so that most people will get a direct answer within 60 seconds. However, in some instances, issuers will 'refer' decisions. This may be because they want to double check information (where credit file data does not match as expected), because their link to the credit reference agency is closed (so they can't get the information they need), or for other reasons. In these cases, you will normally get your decision on the next working day.
It's unlikely, but not impossible. Issuers use past credit history and attempt to predict likely future behaviour from it. With no credit history, they have very little information to base a decision on. If they do offer you credit, it is likely to be at a high rate of interest, and you'll only likely be eligible for a small credit limit.
A number of issuers, in different credit card categories, offer instant decisions. If an instant response is available, then it will be publicised on their application form, but (given that you’re short of time), we've done the work for you! Use the table above to compare products which all offer instant online decisions.
They can, but it's rare. Usually, when this happens, it's because there has been a significant change in your credit file/financial status between the time your expected lender processed your application and the when they posted your card/paperwork. Obviously, lenders’ overriding objective is to ensure they are repaid in full. If anything casts doubt on your ability to do this, even at the eleventh hour, they will reject your application.