How to Get a Credit Card
Applying for a credit card can be a quick and easy process if you know what you’re doing. Whether it’s your very first credit card or you’re looking to add another to your wallet, use the information in this article to better understand the process, from preparing to apply all the way through acceptance.
- Before You Apply for a Credit Card
- Where Can you Get a Credit Card?
- How to Get a Credit Card: Application Time
- After You’ve Applied to Get a Credit Card
Step 1: Before You Apply for a Credit Card
Applying for a credit card can be exciting and potentially a little nerve-wracking. Before you apply, it’s important to educate yourself and practice good credit habits from the beginning. Follow these seven tips to help lessen the stress involved in the application process and to help keep your financial future healthy.
Understand Your Credit Score
Know the essentials about your credit report and score before applying for credit. Your credit score is a three-digit number that’s calculated based on multiple factors including:
- Payment History (35%): the historical record of whether you’ve paid your credit accounts on time. This includes records from credit cards, retail accounts, mortgages and other types of loans.
- Amounts Owed (30%): the total amount of money you owe lenders as well as how that compares to the total amount of credit you’ve been extended, called your credit utilization ratio. Typically, the lower your credit utilization, the better.
- Length of Credit History (15%): the length of your credit history. Those with a longer record of repaying loans are seen as being more creditworthy. A credit agency looks at the age of your oldest account, as well as the average age of all your accounts.
- Credit Mix (10%): the different types of credit accounts you have open, including credit cards, retail accounts, installment loans, vehicle loans, and a home mortgage.
- New Credit (10%): the number of new credit accounts you’ve applied for or opened.
Whether it’s through your bank or elsewhere, many financial institutions offer tools to check your credit score and identify which, if any, of these areas are weaknesses in your credit profile.
Check Your Credit Report
Regardless of when you plan to apply for a credit card, get into the habit of reviewing your credit report on an annual basis. Mistakes on your report may impact your score, so you’ll want to take care of any errors before you apply for any form of credit. You’re legally entitled to one free credit report a year from each of the three credit reporting agencies: Equifax, Experian and TransUnion. Visit AnnualCreditReport.com to request your report.
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Reduce Your Debt
Since the amounts you owe make up a whopping 30% of your credit score, it can be helpful to make an attempt to pay down your debts before trying to get a credit card. Put together a plan to pay off debt, or at least reduce them to lower your credit utilization ratio, potentially improve your credit score, and improve your chances of a successful credit card application.
Be Ready to Prove You Can Make Payments
To get approved for a credit card, you’ll also need to provide proof that you have the ability to make payments. Credit card companies may need to verify your income to determine if you qualify for credit. They may also review your current financial obligations, like rent or mortgage payments.
Understand Terms and Conditions
When you sign a credit card application, you’re agreeing to the terms and conditions in a contract. Just like any contract, you probably shouldn’t sign it without first understanding what’s in it.
By reading about the associated fees, interest rates, reward program details, and other specifics that apply to your credit card, you’ll not only be better prepared to understand what you’re agreeing to and learn the consequences of not using the card properly. You can also be sure you are utilizing all the benefits the card has to offer that you may not know about otherwise, such as rental car insurance, fraud protection or extended product warranties.
Once you feel prepared to apply for a credit card, it’s time to search for and select the card that’s right for you.
Step 2: Where Can You Get a Credit Card?
Applying for a credit card is a simple process that can usually be done online, over the phone or in person, depending on the issuer. Applying online is usually the fastest route to a decision, but applying in person also has its benefits.
It’s easiest to apply for a credit card online. If you’re not sure which specific credit card or issuer you’d like to go with, there are a handful of websites where you can compare popular offers. Of course, you could always apply for a credit card the old-fashioned way by walking into the branch of a bank.
There may be some benefit to applying in person if you’re worried about being denied. Applying in person — like calling an issuer — also allows applicants to easily ask specific questions about a card so that they’re confident in their choice.
Ultimately, there’s really no wrong way to apply for a credit card. It all starts with knowing where you can get a credit card, and it all comes down to what you’re most comfortable with and applying for the right card.
Choose a Card that Matches Your Needs
In the end you’ll want to narrow your search down to cards that both fit your lifestyle and needs, and cards for which you’ll have a good chance of being accepted. When you’re just beginning to build your credit, look into cards that require little or no credit history. The best first-time credit card for you may be a secured card or student credit card. If you have an established credit history, consider what you want out of a rewards credit card and apply for cards that make the most sense for your lifestyle and spending habits.
- Secured Cards: A secured credit card can help those with no credit or poor credit build their credit. These cards require a refundable security deposit in exchange for a line of credit. Once cardholders qualify for a regular, unsecured card, they can get their deposit back.
- Student Cards: Getting a student credit card will require submitting proof that you’re a student, but doesn’t require any security deposit. These cards typically offer rewards in a variety of categories.
- Rewards Cards: Credit card rewards are a great way to turn your everyday spending go further. Choose a rewards card that matches your habits and goals—whether it’s a travel credit card that earns you airline miles, or a cash back credit card that earns extra rewards on purchases at gas stations and restaurants.
Step 3: How to Get a Credit Card: Application Time
You’ve studied your credit score and more. You’ve narrowed it down to your credit card of choice. Now it’s time to apply. Here’s what to expect during the actual application process.
What You Need to Apply
The credit application process is actually quite simple, so long as you know what sort of details you may get asked, whether you’re applying for credit cards online or by mail. Be prepared to provide information such as your:
- Full name
- Social Security number
- Birth date
- Current address (and how long you’ve lived there)
- Email address (usually optional)
- Annual income
- Current employer (and how long you’ve worked there)
These details are typically requested on credit applications, but some creditors may request a variety of other information. For instance, some lenders will ask for employment information, financial/asset information or numerous other bits of information depending on what you’re applying for. For example, a mortgage application will ask about the property you’re purchasing, while a car loan application will require details on the vehicle.
How Long Does It Take to Get a Credit Card?
Getting a credit card decision is a relatively quick process, especially when you apply online. After you’ve submitted your application, the credit card issuer checks your credit with at least one of the three major national credit bureaus. This process can take from a few seconds to a minute or more depending on your internet speed and network conditions. After the credit check is complete, you get a decision on the screen.
At this point, there are three possible outcomes: You can be instantly approved, instantly denied, or you can receive a message that your application needs further review. With an instant approval, the issuer will typically deliver the card in 7-10 business days.
Not All Approvals Are Instant
The credit card issuer may need a human, rather than a computer, to review your application and make a decision. In these instances, it will take longer to hear back on an approval decision.
The credit card approval time can be extended by something as trivial as verifying your personal information due to some discrepancies between your application info and your credit file, but it may also mean that the issuer is concerned about its exposure (especially if you already have another credit line with them). If you are in no rush to receive a new card, just let the review run its course.
Step 4: After You’ve Applied to get a Credit Card
When you finally receive your application decision, there’s obviously only two possible outcomes: acceptance or denial. If your application is denied, don’t despair. Instead, find out the reason for your denial and work to put yourself in a better position for future applications.
Why Was My Credit Card Application Denied?
Having a credit card application denied can be frustrating, and can also be a sign of some issues with your finances. If you understand some of the key factors that are considered in the credit card application process, you can work to improve your financial situation so you can reapply in the future.
All hope is not lost if your application for a secured credit card is rejected. If you didn’t before, make sure your credit report is error-free, and explore your options to boost your credit score. With time and concerted effort, you can put yourself in a better position to re-apply for a credit card.
After Your Credit Card Application is Accepted
A credit card is an important and potentially powerful tool that can help you reach your financial goals. It doesn’t matter whether it took you one or many applications to secure one for yourself, once you have one, the guidelines are the same: use your credit card responsibly in order to enjoy its many benefits. You may make mistakes along the way, but with concerted effort and the help of the right credit card resources, you can make the most of your new credit card.
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