How to Apply for a Credit Card

How to Apply for a Credit Card

A credit card is a great tool to make purchasing goods and services as easy as possible. Some cards offer great rewards to go along with convenience and can help you build your credit at the same time.

But what do you need to apply for a credit card? Knowing what the credit card companies want can take the guesswork out of the process and make it as simple as possible.

Getting Qualified

Credit card companies look at a few different factors when they consider whether or not to approve you. When you use a credit card, you’re essentially paying for something with money that isn’t yours, and you agree to pay it back. So they want to make sure you’re a good investment.

One of the biggest things they consider is your credit score. The better the credit score you have, the more likely you are to be approved. Not only will your credit score and credit report affect whether or not to approve you, but it will also help determine your credit limit and interest rate.

A poor credit score will indicate to your potential lender that you’re not responsible with your money. In their eyes, you’re more likely to charge lots of money to the credit card and never pay it back.

Compare Your Options

When searching for a credit card, you’ll want to shop around to make sure you’re getting the best deal. Every credit card is different, so look for a card that meets your needs and your credit profile.

Benefits and Features

Ask yourself what exactly you’re looking for in a card? Are you looking for a card with a low interest rate? Or are rewards important to you? If you’re looking for rewards, what type of rewards would you prefer? Are you an avid traveler? You may want to keep your eye out for cards offering travel miles. Other options include rewards points or cash back.

Interest Rates

Second, double check the interest rates you’ll be charged. You won’t know what your exact rate will be until you’re approved, but lenders typically advertise a range of rates. You can get a good idea what your rate might be by comparing your credit score to the potential interest rates. But don’t just focus on the interest rate for purchases. Many credit cards have separate interest rates for balance transfers and cash advances. If your card offers a promotional interest rate, make sure you understand the terms and when it expires.

Fees

You’ll want to look at fees you might be charged on the credit cards you’re looking at. Does your card charge an annual fee to use it? If you travel overseas, you’ll want to know the foreign transaction fees you’ll incur if you use it in another country. If you plan to transfer your balance from another credit card to the new one, there’s likely a fee for the balance transfer. It’s typically a percentage of the amount being transferred.

Your Credit Score

Lastly, consider your credit. Credit card companies don’t advertise what the minimum credit score is they require to be approved. But if the card you’re looking at offers lots of fancy benefits like above-average cashback rewards or super-low interest rates, they’ll likely require better than average credit. Instead of telling you the required credit score, companies may indicate what type of credit you’ll need for individual cards. Classifying them by needing Fair, Good, Very Good, or Excellent credit can steer you in the right direction to increase your chances of approval. If you know you have poor credit, you can still get approved. Many companies offer cards specifically to help you build your credit. You won’t get the fancy benefits and low interest rates that other cards offer, but they give you the opportunity to work your way up to it.

How to Apply

Alright, you’ve narrowed your options down. Now you need to apply. You can apply either by filling out and mailing a paper application or by applying online on the company’s website

Applying online can be beneficial as you’ll typically get a decision on whether or not you’re approved just seconds after submitting the application. Paper applications can take weeks to hear back.

Either way here are the pieces of information you’ll need:

1. Personal Information

You’ll need to provide some basic information about yourself. They will ask you to enter your name, date of birth, social security number, address, phone number, email, and your mother’s maiden name.

These pieces of information will help to confirm your identity and provide the credit card company with a way to get in touch with you.

2. Income

The next piece of information to include will be your annual household income. They will want to know how much money you bring in and where it comes from (employment, self-employment, unemployment benefits, retirement income, etc.)

You’ll also have the opportunity to list other sources of income if you’d like it to be considered such as alimony, child support, or disability benefits.

You may be asked to provide documentation later on so do yourself a favor and don’t overestimate your income.

3. Housing

Credit card companies will want to know about your housing situation. Do you own your own home, are you renting, or do you live with family?

They will likely ask how much you pay each month for your housing. The credit card company is trying to decide if you can afford your bills and how much extra you can afford to pay if you begin purchasing items with a credit card. They will also want to know how long you’ve lived in your current home.

4. Co-Borrowers and Authorized Users

If you plan to open a “joint” credit card with someone else, or would like another person to have access to your credit card, now is the time to enter their information. Both co-borrowers and authorized users will receive their own credit card hooked to your account, so take caution when considering who, if anyone, you trust with this responsibility.

Co-Borrowers are jointly and severally liable for the balance on the credit card. This means that if you stop paying your bill, the credit card company can go after either of you individually to repay the charges, whether or not they ever used the card.

Authorized Users can charge purchases to your line of credit, however, they are not responsible for paying it back. We all like to think our friends and family have our best interest at heart, but make sure your authorized user isn’t going to take advantage of the situation.

Remember: Each credit card application you submit will result in a hard credit inquiry to your credit report. These hard credit pulls will knock a few points off your score each time. Be stingy with the applications you submit.

The Decision

If you applied online and were approved for the credit card, you’ll get a big congratulations message on you screen. This will come with more information on when to expect your card and may include some of the terms. The full disclosures will be mailed to you with your physical credit card within a few days. All that’s left is to activate your card and start using.

But use it responsibly!

If you’ve been denied, the credit card company is required to notify you in writing of the reason they did not approve you. If an adverse action is taken against you as a result of something on your credit report, the credit card company must inform you which of the three major credit bureaus they used to review your credit report. Under the Fair Credit Reporting Act, you are entitled to request a free copy of the credit report from that bureau.

Once you’ve received your credit report, review it for any inaccuracies that could have resulted in your denial. Take this opportunity to review your report and figure out how to improve your credit

Related: How to Repair Bad Credit

Scott Marcello

Scott Marcello is the founder of CleverWithCash. He's gathered experience in several areas of finance having worked in a bank and as a tax preparer. People have been asking him for years how to get their finances in order. So he figured, why not put the advice all in one place? Thus CleverWithCash was born.

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