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Applying for a credit card can be pretty easy — if you’re prepared to provide some personal information and can meet certain financial requirements.Though the criteria for deciding who is approved for a credit card and who isn’t may change a bit from one credit card issuer to the next, there are some questions and qualifications you can expect to encounter no matter where you apply. That’s why it could be helpful to study up on some basics with this beginner’s guide to credit card requirements.
What Is a Credit Card?Consumers can use credit cards instead of cash to make purchases or get cash advances up to a predetermined limit. Then, they’ll pay back the amount owed either all at once or over time. If the cardholder doesn’t pay off the balance (the total amount owed) in full each month, how credit cards work is that the finance company that issued the card will charge interest on the borrowed money. The issuer also may charge an annual fee for the card, whether the cardholder uses it or not.Credit card debt is called revolving debt, because there’s no set date for when the account must be completely paid off and closed. The balance can go up and down, over and over, for months, years or even decades.
Steps to Consider Before Applying for a Credit CardIf you have a steady income and a decent credit record, you likely will be able to qualify for some kind of credit card. (There are even credit cards for bad credit out there.) But before you fill out an application, there are a couple steps you may want to take:
- Get a clear idea of what your current credit scores look like: Your credit score can be a key factor in determining if you’ll qualify for the credit card you want and what the interest rate might be. If your credit score is low or average, you may want to press pause on your plans and take steps to increase it. Many financial institutions now provide free “educational” credit scores for their customers, so you may be able to find yours on your online statement.
Then, when you find a card that suits you — with the most competitive interest rate and rewards you’ll actually use — you can decide whether to move forward and complete a credit card application.
- Check out your credit card options and get prequalified: With the above information in hand, you can check out a credit card comparison site like Lantern, review the different kinds of cards that are available and think about what would be a good fit for you. You may even consider going through the prequalification process with a few lenders to see what card offers they have for you.
How Many Credit Cards Can You Apply For?According to data gathered by Experian, Americans held an average of 3.84 credit cards at the end of 2020. (Baby boomers and Gen Xers had the most credit cards, while millennials and Gen Z had the fewest.)As long as you can manage the payments and aren’t getting in over your head, it’s entirely up to you to decide the appropriate number of credit cards to hold at one time. Financial experts typically advise having at least one card, though, because, when used responsibly, it can help you build your credit. Considering the growing number of credit cards that offer points, cash-back rewards and low-interest balance transfers, it can be tempting to keep at least a couple of cards in your wallet. However, you may want to put some space between your applications if you decide to go for multiple credit card accounts. Otherwise, you might see a drop in your credit score that could affect the type of offers you can get or even lower your chances of being accepted. That’s because whenever someone formally applies for a credit card, the card issuer does something called a “hard pull” on their credit report. This can result in a temporary dip in that person’s credit score.One application likely won’t cause any issues, but a sudden burst of multiple credit inquiries may raise a red flag to lenders that the applicant is planning to take on a significant amount of debt. And too many applications too soon could lead to a more serious decline in a person’s credit score.Some credit card companies have an established threshold for how many cards an individual can apply for within a specified period of time. To avoid any problems, it can be a good strategy to wait at least a few months between applications.
What Are Some Credit Card Requirements?To get approval for a new credit card, you’ll have to meet certain eligibility requirements for applying for a credit card. Some are standard to every application, while others may vary depending on the lender. Here are some of the basic credit card requirements.
Age Requirements for a Credit CardThanks to protections put into place by the CARD Act of 2009, the rules for signing up young consumers for a credit card are a bit more stringent than they used to be. In general, applicants now must be at least 21 to get a credit card.That being said, there are some exceptions. Applicants aged 18 to 20 who have an eligible co-signer and/or can prove they have an independent source of income can apply for a card on their own.
Social Security NumberTo comply with the 2001 USA PATRIOT Act’s efforts to combat terrorism, financial companies are required to verify a credit card applicant’s identity. You should be ready to provide your Social Security number and current address in order for them to run that check.The lender also can use your Social Security number to check your credit reports and determine your creditworthiness.
CitizenshipU.S. citizenship is not a requirement to get a credit card in the United States. However, there are credit card companies that prefer to offer cards only to U.S. citizens or to permanent residents who can provide a Social Security number. Due to this, you might want to check an individual lender’s requirements before applying.If you’re in the United States on a student visa, you may find you can qualify for a student credit card using copies of your passport, student visa and immigration papers. Additionally, you’ll need to open an eligible U.S. bank account.If you’re a professional working in or relocating to the United States, your employer may be able to help you find a credit card company that will work with you. Some issuers may accept an Individual Taxpayer Identification Number (ITIN) in place of a Social Security number.
Verifiable Income SourceYou’ll also be asked to report your gross annual income on the credit card application.The income you report doesn’t necessarily have to include just what you get from a job — it can come from other sources as well. But you aren’t required to report all of your income sources if you don’t want to. For example, you don’t have to report alimony or child support if you don’t want the lender to consider those amounts when assessing your ability to pay and determining your credit limit.Though it may be tempting to inflate your income to qualify for the credit card you want, it’s a risk. In fact, it’s illegal to give false information on a credit application.
Documentation Requirements for Applying for a Credit CardDepending on your age, your credit or the type of credit card you’re applying for, you might have to show documentation that supports the information on your application.Documentation requirements for credit card approval may vary by lender and by applicant. In general, however, you may be asked to provide the following items:
You may be able to upload copies of these documents online or, if there’s a brick-and-mortar location in your area, the lender may ask you to bring in the paperwork in person.
- Recent pay stubs
- Tax documents
- Identifying documents with a current photo
- Proof of your age and/or current address
Requirements for Credit Card PrequalificationThe prequalification screening tools used by credit card companies and credit card comparison sites typically ask for information that’s similar to what’s required when you formally apply. However, in this case, here may be a soft pull on your credit, which won’t affect your score like a hard pull would.You’ll typically need to enter your name, income, employment status and at least the last four digits of your Social Security number. Some sites also will ask about your housing status, what kind of bank accounts you have and what kinds of cards you’re most interested in applying for.Based on that information, the site will then show what cards you would likely qualify for based on your answers. You still won’t know for sure that you’ll actually receive a card that’s been offered until you formally apply, and you’ll probably still have to go through a hard credit pull at that time. But with credit card prequalification, you at least can get an idea of where you stand before taking that next step.
What About the Requirements for a Prepaid Credit Card?While regular credit cards are a kind of loan, prepaid credit cards are more like gift cards. Once you load money into your card account, you can use the card for purchases or at an ATM until your deposit is used up. After that, the card stops working until you put more money into your account.Because you aren’t borrowing money, the requirements for getting a prepaid card aren’t as strict. Still, when you register the card, you likely will have to provide some personal information, including your:
- Full name
- Street address
- Email address
- Phone number
- Social Security number, individual taxpayer identification number or some other form of identification
Choosing a Credit CardBefore you go shopping for a credit card — and definitely before you apply for one — it can be helpful to review what you most want from the account. For example, if you think you’ll carry a balance from month to month, your priority might be to get the lowest interest rate possible. But if you plan to pay off your account balance every month, and you don’t have to worry as much about interest rates, you may focus on choosing a credit card with appealing travel or cash-back rewards. On the other hand, if you’re looking to build or rebuild your credit, you could check out the best offers available for both secured and unsecured cards.
The TakeawayBecause credit cards can play such a vital role in your financial life — for better or for worse — it’s important to be as prepared as possible before you apply for a new card. A credit card comparison site like Lantern can help you research what type of cards you’re likely to be approved for, the potential interest rates and fees and the benefits you can expect from the card you choose. Ready to apply for a new credit card? Compare credit cards with Lantern today.
Photo credit: iStock/everydayplus
About the Author
Kim Franke-FolstadKim Franke-Folstad is an award-winning journalist with 30 years of experience writing and editing for newspapers, magazines and websites. Her work for SoFi covers a range of topics related to personal finance, including budgeting, saving, borrowing, and investing.