Applying for a credit card involves researching the cards that best meet your financial needs and filling out an online or paper application that includes your name, address and employment status.
To be sure, if you have a bad credit score, it might be difficult to get creditors to approve your application. So, before applying, it helps to know how to apply for a credit card to increase your chances of getting approved.
Basic approval requirements
The legal age of eligibility for a credit card is 18, but applicants that young should have a stable source of income before applying. Otherwise, they may need a co-signer.
The law doesn’t require that people earn income from a full-time income to get a credit card, but creditors want to ensure that applicants can make payments on time, and this is one indicator that they will.
People with part-time jobs can put their income on their credit card application. If it’s high enough, the bank may consider their application.
Determine what type of credit card is suitable
Before you apply for a credit card, you should determine what type of card you need and can afford.
For instance, if you’re a regular traveler, you might want a frequent flyer credit card that offers travel perks.
If you have big-ticket items in mind but want to keep your interest rate low, a zero percent interest-rate credit card may be best.
In addition, if you’re are struggling to repay your existing debt, a balance transfer credit card with a zero percent promotional offer could help you get your spending under control.
Compare available cards
After determining what type of card is needed, start to compare the card options.
Compare the fees, charges, interest rates and interest-free periods that each credit card offers. you also should compare whether the cards offer a rewards program, insurance and the ability to add other cardholders.
Keep a positive credit score
A credit score is a rating that corresponds to how creditworthy you are. Banks typically check applicants’ credit scores to decide whether to offer them credit and at what interest rate.
While there may be some variation based on the credit card issuer, credit scores are generally classified as follows:
- 800 and above — Excellent.
- 740 to 799 — Very good.
- 670 to 739 — Good.
- 580 to 669 — Fair.
- 579 and below — Poor.
Most credit card issuers look for excellent to good credit scores. So, if you struggle to maintain a good credit history, you should put off applying until getting your debt under control.
Making timely payments and keeping balances low on existing credit cards will help you to maintain a high credit score.
Settle the balances on existing credit cards or loans
Creditors do not like to see high credit utilization rates. Such rates represent the ratio between the amount of credit available and the amount you are using.
If you carry high balances, reducing them will improve your credit score. Some financial experts recommend a strategy of paying down debt first to 30 percent of the credit limit, then to 20 percent, and finally to 10 percent. You should do this card by card.
The bottom line
You should be careful when applying for multiple credit cards at the same time.
Too many credit card providers inquiring about credit history in a short period of time can negatively impact credit scores, because it appears that the person is having a hard time getting approved or is about to take on new debt.