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Access to a credit card is useful, they are safer than debit cards or cash, and using them helps you to build credit. The better credit cards even have extra benefits like reward points for certain purchases and more.
But, it can be hard to get credit card approval, and learning more about the application process is important. In this article, we will show you how to choose the right credit cards to meet your needs and how to apply for them.
6 Steps To Take When Applying For A Credit Card
There are six steps to follow when you’re applying for a new credit card:
Step 1: Check Your Credit Score
First, you need to check your credit score. This is used to help issuers determine if you are creditworthy and that you can be trusted to pay back loans.
A bad credit score will cause the application to fail, and that’s why you need to know your credit score in advance. You can request one free copy of your credit score from Equifax, Experian, or TransUnion every year.
An alternate approach is to get a free credit score from a financial institution. Check with your bank website to see if they offer this service and if they don’t you can use another service, such as:
- Chase’s Credit Journey
- American Express’s MyCredit Journey
- Capital One’s CreditWise
- And others.
There is no need to open an account with these financial services to get your credit score.
If you want more detailed information, take a look at your credit score which has more details. The best way to think of the differences between a credit score and a credit report is that the former is a grade and the latter is a set of assignments.
So, the credit score will include all the account activity that brought you to the credit score, which is your overall grade. If the credit score has errors, you can dispute them.
According to Experian data, the average credit score for United States residents was 714 across all age groups. In the table below you can see a breakdown per age:
Step 2: Compare Cards
The next step is to compare cards and choose the right credit card to meet your needs. There is no one-size-fits-all solution, but if you know how and where you spend your money, it is easier to narrow your selection.
The next step is to choose the right credit card to meet your needs. There is no one-size-fits-all solution, but if you know how and where you spend your money, it is easier to narrow your selection.
This is especially important if you want the category-based reward-earning perk for regular purchases. There are three main types of a credit cards.
1. Rewards Card
This allows the user to earn some rewards in the form of points, miles, cash back, and more. The amount you can earn will be based on a percentage of your credit card spending. These rates can vary a great deal, and rewards card approval tends to require good to excellent credit scores.
Rewards cards can vary a great deal, so if you’re interested in this type of card, there are a few things to look at:
- The Reward Categories: You need to make sure that the reward structure fits your typical spending patterns to ensure you get the maximum rewards. There is no point in getting 10 points per dollar on travel purchases if you don’t like to stray too far from home. Travel credit cards usually offer better perks compared to cash-back cards.
- The Annual Fee: Generally, there is a correlation between the rewards and card perks with the annual fee. The cards offering the most rewards also tend to have the highest annual fees. So, you need to make sure that your spending habits and preferences will allow you to easily offset the annual fee each year. Overall, travel card fees tend to be higher compared to cash-back cards.
- Other Fees and Charges: You also need to look at the terms and conditions to ensure that you’re comfortable with the other fees and charges that will apply to your new account.
United Explorer Card
1X – 2X 2x per $1 spent on United purchases, hotel accommodations, restaurants & eligible delivery services and 1x per $1 spent on all other purchases
$95 ($0 first year)
Delta SkyMiles® Gold American Express Card
1X – 2X 2X miles on delta purchases, at restaurants worldwide (including take-out and delivery in the U.S) and at U.S. supermarkets, and 1x miles on all other eligible purchases
American Express® Gold Card
1X – 4X 4X points at restaurants (including Uber Eats purchases in the U.S.) and U.S. supermarkets (up to $25,000 per year in purchases, then 1X points), 3X points on flights booked directly with airlines or on amextravel.com, 2X points on rental cars through amextravel.com and 1X points on all other purchases
Chase Sapphire Preferred® Card
2X – 5X 5x total points on travel purchased through Chase Ultimate Rewards, 3x points on dining and online grocery purchases and 2x on other travel purchases. Plus, earn 1 point per dollar spent on all other purchases
Citi® Double Cash Card
2%* 2% cash back rewards rate – 1% every time you swipe and another 1% upon payment.
Capital One Savor Cash Rewards Credit Card
1% – 4% unlimited 4% cash back on dining, entertainment, and popular streaming services, 3% at grocery stores and 1% on all other purchases.
2. 0% APR Card
This usually comes with an introductory offer of 0% APR on balance transfers or purchases or both. It’s a good fit for people that have some outstanding debt that they want to pay down or if they have a big purchase and they need some breathing room.
Although all 0% APR cards may appear the same, there are some key differences that you’ll need to assess, especially if you're looking for balance transfer cards, including:
- The 0% APR Period: The introductory interest-free period can vary from a couple of months up to two years, you need to know when the 0% rate will end so you can plan accordingly.
- Qualifying Transactions: You also need to look at whether the 0% applies to purchases, balance transfers, or both. If you are transferring a balance, be sure to look at if a balance transfer fee applies.
- The Regular Rate: Although it is easy to be dazzled by a 0% rate, don’t forget to compare the regular rate that will apply after the promotional period ends.
The Amex EveryDay® Credit Card
15 months on purchases
Capital One SavorOne Card
15 months on purchases and balance transfers
Wells Fargo Active Cash
15 months on purchases and qualifying balance transfers
Discover it® Cash Back
15 months on purchases and balance transfers
Citi Custom Cash℠ Card
15 months on purchases and balance transfers
3. Secured Credit Cards
If you have no credit history, history of late payments , low credit score or high debt-to-income (DTI) ratio, you may want to consider a secured card. Applying for a secured credit card is significantly simpler than for a conventional credit card because of the security deposit.
The precise amount of the needed deposit varies. For instance, Bank of America requires a minimum $200 security deposit. There is a $5,000 maximum as well. Other banks need various minimum security deposits.
Here are the main factors to consider when choosing a secured card:
- Security deposit: A security deposit actually set your credit limit. Check out how much you can put in and which type of deposit you should make.
- Boosting Credit Score: Does the card issuer report to all credit reporting agencies so you can build your credit fast?
- Annual Fee: Most secured credit cards have no annual fees, but some of them do charge it.
Discover it® Secured
Citi® Secured Mastercard®
Capital One Secured Mastercard
Step 3: Paperwork
Many people are concerned about paperwork, but the credit card application process is simple because financial institutions want your business.
Online applications are possible for most cards, or you can call a representative or visit the issuing bank for that personal touch.
Details You Likely Need To Provide When Applying
The credit card issuer is likely to want some or all of the following personal information:
- Name: Every credit card issuer will need your legal name for the application.
- Social Security Number or Individual Taxpayer Identification Number (ITIN): These details are needed for a hard credit pull, and they will be the most influential factor on whether your application will be approved or rejected. Although there are some credit card issuers that don’t perform credit checks these are an exception to the rule.
- Income: This information will help the credit card issuer to determine how much of a credit line you would find affordable.
- Address: Every applicant needs a valid U.S. address to apply.
- Housing Costs: This fixed cost is used with your income to determine the value of credit that could be reasonably extended to you.
There may be other supporting details and documents that you need to complete a credit card application.
As an example: The card issuer may ask if you rent or own a home and how long you have been at your current address. You may be asked questions about your source of income, assets that you may own, and your current employer.
Be honest at all times and make an attempt to answer these supplemental questions to the best of your ability.
Step 4: Checking Pre Approval Options
You can check for pre-approval before you even apply for a credit card. But, if you are pre-approved, this is no guarantee that you will get the exact card that you want.
There is a free tool from Bankrate known as CardMatch that has a prequalification process that can match you with personalized credit card offers that meet your needs.
Using CardMatch involves a soft credit inquiry which makes it a great tool to use at this stage. It’s important to understand the differences between a soft and hard credit inquiry.
A soft credit inquiry cannot affect your credit score, and you can do it at any time with no consequences. A hard credit inquiry is different, it can lower your credit score, and the results are reported to the credit bureaus.
Step 5: Review Terms and Conditions
The terms and conditions for the card are listed in the fine print, and it’s important to understand these details. After approval, you need to know the approved credit limit, the billing due date, and the APR if you plan to carry a balance.
The best way to use a credit card is to pay the full amount every time, and we don’t recommend carrying a balance at all. Every credit card agreement is required by law to display the rates and fees table which is known as the Schumer box.
This table outlines the fees related to your credit card and some of the details that you can expect to see are:
- The annual fee.
- The minimum charge amount is if you carry a balance.
- The APRs on purchases, cash advances, and balance transfers and whether the rates are variable.
- Balance transfer fees.
- Foreign transaction fees.
- All penalty APRs and fees related to late payments.
- The finance charge calculations.
The rest of the card agreement will outline other details about your credit card. If you have a rewards card, the rewards rate will be outlined in the agreement.
Some purchases do qualify for the rewards program, and others will not. A card with an introductory 0% APR will have exact details, including the period that you have after opening the card to make a purchase or transfer without incurring interest.
A credit card that can improve your credit (most secured cards) will include the information on how you can increase your credit limit. This is typically good payment behavior and some advice on how you can graduate to an unsecured credit card later.
Step 6: Submit Your Application
Once you’ve selected a credit card that will meet your needs and you’re qualified for it, there are four ways to make that application:
- The Card Issuers Website: This is the easiest method, simply submit your application and wait for a reply. The approval waiting time can vary, but the fastest response time is always the online process. In some rare cases, you can be approved instantly.
- In Person: It can be difficult to find a physical location for some credit card issuers. But, if this is an option, it may be the right approach for you if you have a lot of questions to ask. Another drawback is that you can only apply for the card during business hours. Personal applications tend to get a fast response, but not as fast as online.
- Over the Phone: Applying for a card over the phone gives you the ability to ask questions if there are no physical locations in your area. The waiting and hold times can be lengthy, but the application response is pretty quick.
- Physical Mail: If you apply for a credit card through the mail, you can expect the longest waiting times. The application has to reach the credit card issuer, they then inspect it and mail back the response. This process can take weeks to complete and this should be considered the least efficient way to make an application.
Tips To A Smoother Card Application Process
Let’s take a look at four tips to follow when you’re applying for a credit card:
1. Check Eligibility Chances
We’ve covered this already, but it bears repeating because the credit score is the single most important aspect of credit card approval.
If you visit AnnualCreditReport.com, you can check your credit score annually for free with each of the three main credit bureaus.
Many credit card issuers, loan servicers, and other financial institutions offer a no fee monthly credit score check for their cardholders.
It’s important to remember that different credit card issuers use a variety of scoring methods, and it is possible to have different scores for different cards.
2. Improving Eligibility Chances If Needed
First, clear up outstanding debts and pay off any delinquent or past due accounts. Then you need to decrease your credit utilization ratio because being at the limit of credit is likely to adversely affect a credit score. Reduce to around 30% or less of the available credit that you have across all your existing cards and accounts.
As a general rule, your credit score improves if you’re using less credit. It’s a smart idea to set some realistic expectations when you’re searching for a card and go for a card that you're likely to get.
This may seem strange, but many people seek approval for a premium card for people with extensive resources and they fail. It’s more realistic to seek approval for a card that’s designed for people with fair or good credit scores.
As your payment behavior is maintained over time your credit score will improve, and you can look for a higher-quality credit card at that time.
3. Understand Your Spending Habits
Choose a credit card that closely aligns with your spending habits and you will not regret your decision. There is no point in going with a card that earns you extra miles if you don’t fly much.
If you’re not sure which type of card to pick it’s worth noting that a cash-back card is a more flexible reward option.
Review your recent credit card statement to understand where you spend the most. Break down your spending by category. Estimate how much you spend on each every month. It will help you to narrow down your choices.
4. Make An Extensive Research
It may time consuming, but making good research can save you a lot of money and earn you a bunch of rewards adjusted to your lifestyle.
Compare cards of different issuers, check how many rewards you can expect from each card, and which benefits are more relevant to your spending habits. Some credit cards offer a decent welcome bonus for new customers, and it's very easy to compare it.
If you choose a credit card with an annual fee, make sure you get enough rewards to cover it.
There are many credit card companies, card types, and other options to consider before you make a final decision. But, it’s easy to become overwhelmed with the choices, and people tend to get side tracked. The credit card you choose must be a good match for your needs, and any perks should be an extra bonus.
Applying for a credit card that is not a good fit for your income group will lead to rejection. If you apply for a card that is a bad fit for your needs, it will not be useful and you could be stuck with it for a while until your credit score improves.
Make sure that you fully understand the benefits and features of a credit card before you make an application.
This is a common reason for rejection. The online credit card application must be fully completed with your personal details.
The credit card company will only verify the information that you provide, and if these details are wrong the application will fail. Even something as mundane as a spelling error or misplaced number will lead to an application rejection.
Make sure that every name, number, and other detail that you provide is an exact match for the physical documents that you hold.
If you make frequent applications for credit cards, you will notice that the credit issuer begins to reject them out of hand. Why?
Well, you’re signaling that you’re desperate for extra credit due to financial problems and that makes you a high-risk proposition. The credit issuers will check your credit score when you make a credit card application and if you fail there is little point in repeating the process.
If you have frequent hard credit checks they can have a negative impact on your credit score too and this will lead to more card application rejections. If you’ve been rejected, it’s smarter to wait, follow the advice in this article and then try again later when your financial situation has improved.
Credit card issuers often set introductory interest rates, signup rewards, no annual fee for the first year, and other incentives to attract new customers.
But, these initial benefits are short lived and they tend to be less beneficial as you go into your second year with the card.
Always look at the medium to long-term ramifications of the cark, and it will be more useful in the future.
What if I’ve Been Denied?
If the credit card application is denied, the issuer must inform you in writing why you were rejected and which credit bureaus they used to access your details.
If you believe that these reasons are not valid, you can review the credit report with that bureau. There are cases where an error occurred, or there may be some unresolved situation that you’ve forgotten about. If this is the case, make a reconsideration call and the credit card may be approved.
But, if the application was denied due to a low credit rating for that card, you will need to improve your credit score before you can reapply.
Let’s take a look at four tips that you can follow to improve your approval chances next time you apply:
- Don’t Apply Again: At least for a while, a single credit inquiry may have a small negative impact on an already shaky credit score. Making multiple and frequent inquiries will only make the situation worse.
- Match the Card to Your Credit Score: Don’t walk before you can run, choose a moderate credit card that’s better matched to your existing credit score. As your situation improves in the years to come, you can always upgrade to a high-end card.
- Decrease the Credit Utilization Ratio: If you’re pushing the limit of your existing credit, you’re more likely to fail when you apply for a new card. Using less credit will boost your credit score, and you should aim for 30% under your current credit limit to make real progress.
- Pay Off Past Due or Delinquent Accounts: If you have any accounts like this lingering in your financial history they are a real problem. Pay them off as quickly as possible before you consider making another credit card application.
If you have no credit, you’ll need to look at a beginner credit card or even a secured credit card. This may not offer many benefits, but with responsible use, it will help you to build your credit.
Look for cards specifically designed for those with bad credit. You may also need to consider secured credit cards. Even a card with a modest spending limit and no additional benefits can help you to build your credit.
Explore and compare Capital One cards. Then, visit the Capital One website and apply directly from the website.
There are a number of credit card issuers that allow joint applications or authorized users on the account. So, check the application details for your preferred card options to see if this is possible.
Look for rewards cards that favor gas station purchases. You’re likely to find that almost every card issuer offers some form of gas credit card.