Applying for a credit card can be intimidating. How do you know which card to choose? How long does it take to complete the application? What if your application is declined?
Use this guide to help you through the credit card application process. If you follow these steps, you’ll know everything you need to do to apply for a credit card and increase your chances of approval.
Know your credit score and how it affects your eligibility
Credit card issuers check your credit score as part of the approval process, so you should check your credit score before you start applying. Many banks give you access to your credit score, and you can also check and monitor your credit score for free with Bankrate.
You should also check your credit report to make sure there aren’t any mistakes on the report that could be bringing down your credit score. If you do find errors on your credit report, use the credit bureaus’ online dispute forms to get them fixed.
If your credit score is good or excellent, you’ll be eligible for a wide range of credit cards. If your credit score is average or poor, your options may be fewer, or you may consider cleaning up your credit a bit before you apply for a new card.
Consider boosting your credit score before applying for a new card
Your credit score should be as high as possible before applying for a new credit card — even if you already have good credit. Why? Because credit card interest rates are tied to credit scores, and boosting your credit score could save you money in the long run.
The quickest way to increase your credit score is to pay off debt. Less outstanding debt means a better credit utilization ratio, which is the ratio of available credit to current debt. If you can pay off your credit card balances in full, great! If not, pay off as much as you can.
Decide which credit card is right for you
There are a lot of credit cards out there: travel credit cards, cash back credit cards, credit cards for freelancers and small business owners and more. How do you decide which credit card is right for you?
Consider your current credit level
If you have good or excellent credit, you have a lot of options. If your credit is sub optimal, you may consider opening a secured credit card. With a secured credit card, you put down a security deposit in exchange for a small line of credit. If you successfully pay the debt on time, your credit line will increase and your credit score will grow.
Do a preapproval check
You’re probably familiar with those preapproved credit card offers you get in the mail, but you might not know that most credit card companies let you check for online preapproval before you apply. If you’re worried that you might not be eligible for a certain credit card, visit the card’s website and see if you can get preapproved. It won’t hurt your credit score, and it’s a quick way for you to determine which credit cards might be right for you.
Ask yourself how you want to use your new credit card
Not all credit cards are created equal. Some cards are designed for specific purposes: To help frequent travelers save money on airfare and hotels, to help people save money on everyday purchases like groceries and gas, or to help people pay off credit card debt through balance transfers and interest-free grace periods. Take some time to think about how you plan to use this new credit card — and if you’re not sure, we’ve got seven questions to help you decide.
Ask yourself what type of rewards you want to earn
Many credit cards come with rewards: points, miles, cash back, and more. Some credit cards give the same flat-rate reward on every purchase, and others give higher rewards for certain types of spending (restaurants, groceries, travel). Take a look at our list of the best rewards credit cards to learn about your options.
Gather the materials you’ll need for the application
A typical credit card application will include basic personal information such as name, birth date, Social Security Number and address. You may be asked to provide a previous address, if you haven’t been at your current address for very long. You’ll need to state your monthly rent/mortgage payments.
You’ll also be asked your current annual income, so make sure you have that information easily at hand. If you are self-employed or have fluctuating income, you can estimate your annual income by adding up all of the money you’ve earned this year, dividing it by the number of months it took you to earn that income, and multiplying that number by 12. In other words, if you earned $20,000 (pretax) between January and May, you can divide that number by 5 to get an average income of $4,000 per month, then multiply $4,000 by 12 to get an estimated annual income of $48,000.
Some credit card applications will want to know how many bank accounts you have, and they may ask how much money you currently charge to credit cards every month. Preparing this information in advance — or knowing how to access it quickly — will help you when it’s time to fill out the application.
Complete the application
Although it is still possible to complete a credit card application via mail, most people prefer to complete the application online. If you have your information about income, rent/mortgage payments, and average monthly credit card spending easily at hand, filling out an online credit card application should only take a few minutes. Plus, when you apply for a credit card online, you’ll get a response almost immediately: an approval, a conditional approval, or a decline.
Be aware that completing a credit card application gives the credit card company permission to do a hard pull on your credit. The occasional hard pull is fine, but having too many hard pulls on your credit, especially if they’re back to back, can lower your credit score. Why? Because you’re either taking out a bunch of new credit cards (which suggests you’re going to rack up a lot of debt that you might not be able to pay off) or you’re applying for multiple credit cards and getting denied. Neither option makes you look like a responsible borrower.
Prepare for any follow-up calls
If the credit card company has questions about your application, they may give you a conditional approval and tell you to expect a follow-up call. During the call, a representative will ask you additional questions about your identity or employment, and may ask you to mail or fax documentation proving your identity, your home address or your annual income.
If you are conditionally approved for a credit card, don’t worry. The follow-up questions should be easy to answer, and it won’t take much time to mail or fax a copy of your driver’s license or a recent pay stub. You will receive a final decision on whether you are approved for your new credit card.
Watch for your new card to arrive in the mail
Once you are approved for a credit card, you’ll get information on when you can expect the new card to arrive in the mail. It generally takes 7-10 days for your new credit card to arrive, so if you don’t see it in your mailbox by then, call the credit card company and check on the status.
Once your credit card arrives, you’ll need to activate it before you can use it. Call the phone number or visit the website indicated on the card to complete the activation process. Then sign the back of the credit card, and you’re ready to go!
Use your new credit card responsibly — it’ll help you when it’s time to apply for the next one
Now that you have your new credit card, it’s time to use it responsibly. Maintaining good credit habits can help you when it’s time to apply for a mortgage or a car loan, and can reduce the interest rates you’ll receive when those applications get approved. Good credit can even help you the next time you’re renting an apartment or applying for a job.
One more tip: just because you have a new credit card doesn’t mean you should close out an old one. Your credit score is partially determined by what’s called “age of credit.” The older your credit accounts are, the longer you’ve been able to successfully maintain those accounts — so keeping an old credit card active can help improve your credit score and put you in an even better position the next time you apply for a credit card.