We hear credit horror stories all the time. These tales of debt and financial distress are enough to dissuade anyone from ever wanting to open a credit card, but the truth of the matter is credit is a tool. When used correctly, opening a line of credit can be beneficial. However, when used incorrectly, it can be detrimental.
In order to achieve some of life’s milestones, such as buying a home, getting auto insurance, or renting an apartment, you’ll need a solid credit history. Proving you can obtain and manage credit is a huge step in your life and is one that helps shape your financial wellbeing. So knowing how to properly apply for a credit card and understanding what you can do to increase your chances of getting approved is fundamental when it comes to building credit and improving your financial health.
In This Article
How to Get a Credit Card for the First Time
1. Check Your Credit Score
As you probably already know, your credit score is a creditor’s first line of defense in determining your creditworthiness. This means a lot of weight will be put on your credit score when you apply for a credit card. So knowing which credit score range you fall in will help you identify the right cards to apply for and what you qualify for. For example, if a credit card company designates cards for people with excellent credit, such as those with an 800+ credit score, and you fall in the fair credit range, then you’ll probably want to steer clear of that specific card.
Credit scores are based on your payment history, credit usage, credit age, and how often you apply for new credit. You can check your credit score through a credit card issuer or by ordering it from one of the 3 main credit bureaus: TransUnion, Equifax, or Experian.
2. Consider What Your Needs Are
After checking your credit score and gaining a better understanding of the type of card you might qualify for, you can now start thinking about what your needs are when it comes to a credit card. For instance, if you’re an applicant with no previous credit card history or credit score, you’ll want to look for a credit card that doesn’t require credit history, such as a secured credit card. Secured credit cards are commonly used to build credit and only require a cash deposit to open.
In addition to a secured credit card, consider a retail credit card if you are new to credit. Some other needs to consider include rewards, such as cashback or travel rewards. There are lots of different types of credit cards out there, so do your homework to figure out which ones cater the best to your needs.
3. Understand the Terms and Conditions on the Card
Once you’ve decided on the type of credit card you’re interested in applying for, do some research to familiarize yourself with common credit card terms and conditions before you apply. Knowing what these terms and conditions actually mean will make you a more savvy applicant.
Here are just some of the terms you’ll see:
- Annual fee — A yearly fee charged by the card issuer. Some cards don’t carry annual fees at all, or they’ll waive them for the first year. The ones that do have annual fees usually offer great rewards, like travel perks.
- Annual percentage rate (APR) — The interest that will be applied to your credit account during a billing cycle. You’ll generally pay this interest if you carry a balance or pay a bill late. There are different types of APRs, such as for balance transfers or cash advances.
- Transaction fee — The amount charged in addition to the APRs associated with your account for each type of transaction that you make. For example, a foreign transaction fee is charged when a cardholder uses their card in another country.
- Balance transfer — When you move debt from one account to another account. Some credit card issuers will charge you a fee to transfer a balance onto your card.
- Late fee — A fee a cardholder must pay if they go over their credit limit or make a late payment.
- Cash advance — A loan you take out against your credit card limit. Many credit card issuers charge a cash advance fee per transaction.
- Minimum interest charge — The minimum amount you’ll be charged each month if you carry a balance on your card from one billing period to the next.
Aim for a card with low or no annual fees and a low interest rate. If you plan to pay your bill in full every month, focus on comparing the cards’ rewards and fees.
4. Check for Preapproval
Some credit card issuers allow you to see if you’re “preapproved” or “prequalified” for their credit cards. To do this, you will need to fill out a form and submit your personal information via the card issuer’s website. Once you’ve submitted the form, a soft inquiry will be made on your credit report. A soft inquiry will not affect your credit score.
If you receive a preapproval notice, it means you’ve met all the lender’s criteria thus far. A preapproval means you are likely to get approved, but approval is not guaranteed. You’ll still need to apply for the card to be fully approved.
5. Decide How to Apply
Now that you’re ready to apply for your credit card, you’ll need to choose how you want to do it. You have a couple of options.
Applying online will probably be the quickest and most convenient way to apply — you may even get approved instantly. If you prefer a face-to-face experience, you can also apply in person. Applying in person will allow you to receive a quick response on approval, and you can ask questions in real time. You may also apply over the phone, but keep in mind that you might be put on hold for a while. The last and least convenient option is applying through the mail. If you opt for this method, consider that it could take weeks to receive a response.
What Do You Need to Apply for a Credit Card?
To help the credit card application process go as quickly and smoothly as possible, come prepared with the information you’ll need to apply. Keep in mind that application requirements can vary from issuer to issuer, but in general, this is the information you should know beforehand and have proof of:
- Full legal name
- Social Security number or individual taxpayer identification number (ITIN)
- Address (You must have a valid U.S. address.)
- Date of birth
- Annual income
- Housing costs
In addition to the above, a card issuer might also ask for subsidiary information, such as how long you’ve been at your current address and if you own or rent your home. They could also ask about your current employer, your main source of income, and any assets you may have.
How to Get Approved for a Credit Card
To enhance your chances of approval, try the following:
- Improve your credit score — A stronger credit score will better your chances of getting approved for a credit card. Consider becoming an authorized user on someone else’s account or keeping your credit utilization low in order to build your credit.
- Take care of any outstanding debt — If you have any past due or delinquent accounts, pay them off as soon as you can. Ideally, your debts will be paid off before you apply for a credit card.
- Establish a good relationship with a bank — It’ll probably be easier to get approved for a credit card if you apply with a bank that you already have a checking or savings account with. This is especially true if you’ve demonstrated responsible account management, such as no overdraft fees and keeping up with payments.
How to Get a Credit Card With No Credit or Bad Credit
Having no credit or bad credit is not necessarily a deal breaker when it comes to getting approved for a credit card. There are many ways to still get approved, either by changing your habits, applying for the right credit card, or finding alternative ways to build your credit. Some things you might want to consider include:
- Ask someone to apply for a card with you as a co-borrower
- Have someone add you to one of their cards as an authorized user
- Apply for a secured credit card
- Open a student credit card
- Take out a credit-builder loan
- Look for errors on your credit report
- Pay down the balance on your debt
- Request a credit limit increase
How long does it take to get a credit card?
In general and depending on the method you use to apply, getting approved for a credit card can take a matter of minutes, especially with credit issuers that offer instant approval. To receive your credit card in the mail, expect to wait for about 7 to 10 business days after approval or more.
Does applying for a credit card hurt your credit?
In order to check your creditworthiness, some card issuers will run a hard inquiry on your credit report. A hard inquiry can lower your credit scores by a few points and may stay on your credit reports for as long as 2 years, but the impact is usually short-term and minimal.
How often should you apply for a credit card?
How often you apply for a credit card will depend on you and your financial situation, as there’s no hard and fast rule for this. It’s important to remember that each time you apply for a new line of credit, a hard inquiry may be triggered, which can lower your credit score. Also, keep in mind that credit card issuers might have their own limits on how often you can apply for new credit.
What age can you get a credit card?
The Credit Card Accountability Responsibility and Disclosure Act (CARD Act) of 2009 set a general minimum age requirement to open a credit card without a co-signer to be 21. But young adults under the age of 21 may be permitted to open a credit card if they can prove they are independently able to repay their credit card debts, such as by providing proof of independent income.
What does “preapproved” mean for a credit card?
“Preapproved” or “prequalified” for a credit card simply means that the applicant has met all of the lender’s criteria for opening a credit card. Getting preapproved doesn’t guarantee getting approved for the card in question, though. The applicant would still need to apply in order to be fully approved.
Can I cancel a credit card I just applied for?
It’s usually possible to cancel a credit card application if you act fast. Contact your credit card issuer right away before they run an inquiry on your credit report and decide whether or not to approve your application.
If, after all this, you’re still denied a credit card, remember it’s not the end of the world. You can try again once you’ve done the work to improve your credit standing and score. Don’t overlook the power of weighing your options and applying for non-traditional types of credit cards such as a secured credit card. You’ll eventually find the right fit for you, and you’ll be able to grow from there.