Having a credit card is helpful for many reasons, and being able to get your preferred credit card starts with having a great application.
Here are some important steps you should take to make sure you have the best credit card application possible:
- Know your credit score
- Think about your needs
- Check for pre-approval
- Be prepared for the impact on your credit
- Have a repayment strategy
Read on to learn more about how to apply for a credit card and how to increase your chances of approval.
Information you need to apply for a credit card
Before you apply it’s best to make sure you have all the information you need for your application. By knowing exactly what you need before you apply, the process will be smoother and faster, and you’ll have a better idea of your chances of approval.
Here are some of the key pieces of information to have on hand:
- Full legal name
- Date of birth
- Social Security Number
- Annual income
This information will serve as the basis for your application. However, be prepared to provide more details. For example, your card issuer may want to know how long you have been at your address and if you own or rent. They may also ask about your current employer and the main source of your income. You can also include your spouse’s or partner’s income in the application process.
You can also use an EIN (employer identification number) if you’re applying for a business credit card and your business is considered big enough. Keep in mind that business credit cards may still ask for your Social Security Number during the application process as well.
How to apply for a credit card
A good credit card application will require some prep work on your part. The following steps will help you gather information to put your best application forward.
Know your credit score
Credit scores are used by issuers to determine your creditworthiness. Most issuers have a score range they are looking for in a cardholder. If you’re just starting out with credit and don’t have a score yet, you’ll want to look for a card that requires no credit history. These cards will help you build up your credit score so that you can apply for other kinds of cards in the future. Once you’ve built up your credit score to the good to excellent range (670-850), you’ll have more options for cards, including rewards cards.
To gain access to your credit score, you can purchase it from any of the major credit reporting bureaus: Equifax, Experian and Transunion. Experian offers a free FICO credit score with FICO’s monitoring service, and you may have access to your credit score for free depending on your card issuer. You can check to see if your issuer offers this as a perk by checking their website or calling customer service.
You can easily find out your credit score by requesting a copy of your credit report. Normally, you’re entitled to a free credit report from each of the three credit bureaus every 12 months. But thanks to legislation in the CARES Act, you can request a free credit from each bureau weekly through April 2021.
However you choose to obtain your credit report, make sure you check over it thoroughly for any possible errors. If you find errors, you can take steps to dispute them. When you’re sure the information in the report is correct, make a note of your score. This will be your guide for which cards are available to you now, and which cards you’ll have to improve your score to obtain.
Think about your needs
Once you know what cards you might qualify for based on your credit score, it’s time to think about what your needs are for a credit card. Are you looking to earn cash back, build credit or earn travel rewards? There are lots of card possibilities out there that will cater to each of these needs and more.
Each card also comes with its own terms and conditions, and most cards also charge fees. Check to see if the card you’re interested in has an annual fee and think about whether the annual fee would be worth it to you. Many rewards cards have an annual fee attached to them. Will you be able to earn enough rewards on your card to offset the fee?
Also consider whether you will be carrying a balance on your card or if you will be paying off your purchases in full. If you plan to carry a balance, the interest rate on your card will have a big impact on your monthly payments. You’ll want to look for cards with a low variable APR.
Check for pre-approval
Before you apply for a card, check to see if you can be pre-approved. Bankrate’s CardMatch™ tool is a free resource that will match you with personalized offers through a pre-qualification process that involves a soft credit inquiry. This is a great way to see if you qualify for a credit card before applying, since every application involves a hard credit inquiry that temporarily lowers your credit score.
Pre-qualification — or pre-approval — requires a soft inquiry into your credit report to see if you meet the issuer’s criteria for opening an account. A soft inquiry has no effect on your credit score, unlike the hard inquiry that issuers will do when you apply for a credit card. Being pre-approved, however, doesn’t guarantee that you will get the card you are applying for.
Be prepared for the impact on your credit
Most of the time, applying for a credit card will trigger a hard inquiry into your credit report, which means that the card issuer will pull your credit report to check your creditworthiness. A hard inquiry will cause your credit score to go down a bit, but the effect is short term. The maximum amount of time a hard inquiry will stay on your report is two years.
If you apply for a credit card and your application is rejected, it’s important to time your next application well. One hard inquiry on your report is a pretty neutral occurrence in the long term. However, having several hard inquiries on your report in a short period of time will be a red flag for card issuers.
Have a repayment strategy
Having a credit card comes with the responsibility of making payments on it. Making late payments or minimum payments opens you up to interest charges and fees, in addition to potentially hurting your credit score, so paying in full and on time is the best course of action. Be sure to familiarize yourself with your interest rates and fees you may face. And before you apply, make sure you have included your credit card payments into your budget. Lastly, check to see if the credit card you are applying for allows for autopay (most do) to help streamline the payment process.
Where do you apply?
When you decide to put in your application, you have a few options. The easiest way to submit your application would be through your issuer’s website. Submitting your credit card application online will give you the quickest response for whether you have been approved or not. Another perk of applying online is the convenience of placing your application from anywhere at any time. You can also shop around and compare different credit cards online to make sure you are making the best choice before you apply.
Other options for placing your application are to apply in person, over the phone or through the mail. Applying in person also yields a quick response to the approval of your application and you have the advantage of being able to ask questions in real-time. However, it may be tricky to find physical locations for some card providers and you’ll only be able to apply during business hours.
Applying over the phone will also offer a fairly quick response about your application, but you will have to apply during business hours, as well. And with phone applications, you may have the added hassle of hold times.
Applying through the mail is by far the least efficient of all of the options. You will have to wait for your application to arrive at the issuer and also wait for them to mail back a response, which could take weeks.
What to do if your application is denied
If you find that despite your efforts, your application is denied, it’s not the end of the world. It’s possible your application didn’t go through for a number of reasons, like a low credit score, low income, or a negative credit history.
If you’re unsure as to why your application was rejected, lenders are required to tell you why, due to the Fair Credit Reporting Act. This is called an adverse action notice, and it typically arrives seven to ten days after your denied application.
If you’ve been denied multiple times, it won’t hurt your credit score. However, multiple hard-credit inquiries during the application process will knock your score down a few points. So before you apply for a new card, make sure you know the minimum requirements and why you’ve gotten rejected, so you don’t get hit with another hard-credit inquiry and a denied application. If you keep getting denied, go back to your initial research and look at what other options are on the table, like applying for a secured credit card to help build up your credit score.