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Getting a credit card could be a great step toward improving your credit if used responsibly, but the process of applying for a credit card can seem daunting — especially if it’s your first time. Fortunately, there are ways to make applying for a credit card easier. Read on to learn what you need to apply for a credit card, timing considerations, what to do if you’re denied and more.What Are Credit Cards?
Financial institutions serve as card issuers — and they literally issue a card, usually plastic but sometimes metal, that comes with the account holder’s name, a unique number, an expiration date and a three-digit security code. Each time you use your credit card — whether by swiping, inserting, or tapping your card, or entering your information online — you’ve started a transaction that provides payment to the other party. Use of this card will essentially pay for desired transactions up to your credit limit, and then you’ll pay back the financial institution in full each month, or at least make the monthly minimum payment. Interest is charged on funds that aren’t paid in full within a particular statement cycle.Can I Apply for a Credit Card Online?
You can apply for credit cards online with numerous card issuers and, in general, the process is easy to navigate. When applying for credit cards online, you may receive an answer on approval more quickly than if you were to fill out a paper application at a financial institution or mail in an application.How Often Should I Apply for a Credit Card?
Technically speaking, you can apply for credit cards as often as you want. However, pacing how often you apply can help to protect your credit score. That’s because too many credit inquiries can have a negative impact on your scores. It’s not like auto financing or mortgages either, where a certain number of applications within a certain window will count as a single inquiry — with credit cards, each inquiry counts.Plus, some card issuers have limits on how often you can apply to them for a card. In other words, it’s wise to be thoughtful when you choose a card to apply for.What Do You Need to Apply for a Credit Card?
In general, credit card requirements you will need to meet when applying will include:- Identification: This may include a Social Security number.
- Source of income: This is intended to reassure the lender that you can repay the debt. You may be asked to prove this by showing pay stubs or W-2s.
- Acceptable credit scores: What’s considered acceptable will vary by lender and depending on what card you’re applying for. A basic card may require a score in the mid 600s to the low 700s, while some of the most lucrative rewards cards can require scores of 740+. However, there are credit cards for fair credit, which generally require scores between 580 and 669.
Again, each card issuer can have their own unique requirements, so be prepared to provide what yours needs to apply for a credit card.What Type of Credit Card Should I Apply For?
Before applying for a credit card, it’s important to understand what type of card will be right for you, which depends on your own wants and needs and your credit score. Here’s an overview of some of the types of credit cards that exist and that you may consider:- Rewards credit cards: Top rewards credit cards can range from credit cards with cash back programs or those with travel rewards, as two examples. Cash back cards can offer cash back on most purchases or focus on certain categories and provide percentage-based rewards. Travel rewards cards, on the other hand, offer rewards for airlines and/or lodging.
- Balance transfer credit cards: If you have outstanding credit card debt, transferring it to a top balance transfer credit card with a lower promotional rate may help you save money in interest, thus freeing up more funds to put toward paying off your debt.
- 0% intro APR credit cards: These credit cards have longer introductory financing periods, where a 0% APR credit card is offered for a certain period of time. This could be helpful if you plan to make a big purchase and want some space to pay it off.
- No annual fee credit cards: There are plenty of options from major issuers for credit cards that come without an annual fee.
- Secured credit cards: Secured credit cards can help people with bad credit to rebuild their credit history and boost credit scores. You’ll have to put down a cash deposit, which is usually in the amount of your line of credit, as assurance to the lender.
- Fair credit cards: Cards also exist that can work well for people with fair credit scores, which are generally in the range of 580 and 669.
Things to Do Before Applying for a Credit Card
Before you apply for a credit card, it may make sense to:- Check your credit score.
- Build your credit score, if applicable.
- Get pre-approved.
- Become an authorized user.
- Understand the credit card terms.
Here’s more about each.Check Your Credit Score
To get approved (or to get the most competitive interest rate), it helps to have an established credit history that demonstrates timely payments along with a credit score that meets the financial institution’s criteria. You can get free credit reports from each of the three main credit bureaus. Typically, they are available at no charge once a year, but they are currently available weekly from AnnualCreditReport.com.Build Your Credit Score
Ways to build credit scores include:- Making payments on time
- Maintaining low credit balances on your accounts
- Having a mixture of credit account types
Building credit may take a while, but there are cards to help build credit that you can explore.Get Pre-Approved
Credit card pre-approval allows you to know if you qualify for a particular card without a hard pull being made on your credit. This is important because 10% of your credit score is based on new credit inquiries (and hard inquiries will show up on your reports), so it makes sense to limit the number of applications you make. While pre-approval uses a soft credit check that doesn’t show up on credit reports, keep in mind that it does not guarantee approval. To get approved, you’ll still need to formally apply — which will usually require a hard credit pull.Become An Authorized User
A different route to take when applying for a credit card is to become an authorized user, which is where you’re added to another person’s credit card account with their permission and can then use the account to make purchases. This hopefully can help to improve your own creditworthiness. Note that, as an authorized user, even if you are given your own credit card, you are not legally responsible for making the payments.Understand the Credit Card Terms
Each account comes with its own terms and conditions and, to understand what you’re agreeing to, it’s important to know what different credit card terminology means. Understanding key terms can help you to manage your credit more effectively, which in turn can help you to boost your credit score.What If Your Application is Denied?
Reasons your application can be denied can include issues with employment, income and/or credit. Sometimes, more information may be needed to verify key pieces of information, while other times, your current situation may not fit within the lender’s guidelines.Whatever the reason, it can make sense to consider how you can address the issue. It may be as simple as applying for another credit card that better fits your financial picture. Or, you may need to build your credit history or your credit score before trying again.The Takeaway
Applying for credit cards is a fairly simple process. Before you move forward with applying, it’s helpful to understand what you might need to qualify for one and what information you may be asked to provide in the application process. Additionally, it’s smart to compare possibilities to ensure you make the right choice in credit card for your situation.And if it doesn’t seem like your credit score is quite up to snuff, don’t worry — there are cards out there for you, too. Lantern can help you compare cards to build credit so you can start working on responsible financial habits. Photo credit: iStock/vitapix
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About the Author
Kelly Boyer Sagert
Kelly Boyer Sagert is an Emmy Award-nominated writer with decades of professional writing experience. As she was getting her writing career off the ground, she spent several years working at a savings and loan institution, working in the following departments: savings, loans, IRAs, and auditing. She has published thousands of pieces online and in print.
