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How to Apply for a Credit Card

Choosing the right card can be tough—and applying for a credit card isn’t simple either. This guide could help you gain an edge.

By Allan Halcrow | American Express Credit Intel Freelance Contributor

5 Min Read | December 20, 2019 in Cards

 

At-A-Glance

Careful planning will improve your odds of getting approved for a credit card, though there are no guarantees.

Research your options and be discriminating about which credit card(s) you apply for.

Take the process seriously. A credit card application is a legal document—and it affects your credit score.

You want to apply for a credit card. Do you assume the process will be like applying for a passport or a pet license—that is, approval is essentially guaranteed once you present the necessary information? Or do you assume that it will be like applying to a college or for a job—you focus on your qualifications, identify a good fit, and then present yourself in the best possible light?

 

Although you won’t have to write an essay or go to an interview to apply for a credit card, the process actually is more similar to applying for a job than for a passport. Yet approval rates suggest that many people either make wrong assumptions about the process or overestimate their qualifications. Federal Reserve numbers show that in October 2018, for example, more than one in five credit card applicants were turned down.1 Experts point out that failed applications will knock points off your credit score, and the attempt will be visible on your credit report for as long as two years.2

 

Although there are no guarantees, careful planning can boost the odds that your credit card application will be approved. Here are some experts’ suggestions for how to apply for a credit card.

 

How to Apply for a Credit Card—The Basics You Need to Know

You may want to think twice about applying for any credit card if you:

  • Are under 21 (unless you have your parents' permission or verifiable income);
  • Don’t have a Social Security number;
  • Are unemployed. 

 

The age requirement is federal law, and experts say it’s unlikely you’ll be approved for a credit card without meeting the other two criteria. 3

 

Know Your Credit Score

Your credit score isn’t everything (your income also is a major factor), but it is a baseline in many lending decisions. Some credit card issuers clearly state the minimum score required before they’ll even consider your application.

 

Experts say that a credit score of 700 or better is necessary to qualify for most cards.4 Think of it like the high school GPA you would need to apply to a prestigious university. Just as with universities, the more elite the card (in terms of credit limits, rewards, and so on), the higher the credit score you’ll need. That said, TransUnion reported a 4.3% increase in the number of credit cards issued to subprime borrowers in 20185 (those with scores of approximately 600 and lower).

 

Here are a few ways to find your credit score:

  • The major credit reporting agencies (Equifax, Experian, TransUnion) offer one free credit report per year.
  • Try a financial management app like Credit Karma.
  • Check your monthly statements—some creditors include your credit score.

 

Choose the Credit Card You Want

Literally hundreds of credit cards are on the market. Before applying for any of them, you’ll likely want to do some research and choose your target. Your credit score will help you narrow your options, but you may also consider how you want to use the card. Options include:

  • Secured cards, which require a deposit and are designed for people with no credit history or poor credit history;
  • No-frills credit cards, intended to help you manage cash flow and build your credit history;
  • Balance-transfer cards, designed to help you consolidate your debt;
  • Rewards cards, which offer perks (such as reward points, cash back or travel miles) for using them. 

 

You may want to consider a couple of other things as you narrow the field. Experts say that your odds of approval are generally higher if you apply for a card issued by a bank or credit union with which you already have a relationship. That’s particularly true if you’ve managed your checking account responsibly.6

 

Also, keep in mind that not all cards are equal—differences in interest charges, fees, and other factors can make a big difference. In other words, experts encourage you to read the fine print. To help make that easier, the Consumer Financial Protection Bureau (CFPB) maintains a database of more than 300 credit card agreements that you can read.7

 

Find Out If You’re Pre-Qualified

Pre-qualifying for a credit card is a bit like landing a job interview—you know for sure you’re in the running, but there are still no guarantees. In this stage, lenders determine—primarily based on your credit history—whether you meet certain requirements. To pre-qualify you, they do what’s known as a “soft” credit inquiry—which does not impact your credit score. If you choose to then apply, the lender will run a “hard” inquiry that does impact your score. So, if you don’t pre-qualify for a credit card, you can spare yourself the ding on your credit.

 

Some major banks offer a direct pre-qualification option online. Others pre-qualify consumers and send them offers to apply. There are also online sites that let you pre-qualify for multiple credit cards. Just keep in mind that pre-qualifying is not a promise that you’ll be approved.

 

Complete an Application

You can apply for most credit cards either by completing a paper application and mailing it or by filling out an equivalent form online. The advantage of applying online is that you usually get a decision in minutes, rather than weeks. Either way, be prepared to provide:

  • Name, date of birth, and Social Security number;
  • Gross annual income;
  • Housing situation (including time at current residence);
  • Your signature (actual or electronic) and the date. 

 

If you’re applying to transfer balances from existing cards, you will also need to have the specifics of those cards, such as creditor names, account numbers, and balances.

 

A credit card application is a legal document, so be careful to be accurate. Experts suggest that you report any money you earn outside of your regular job. In addition, if you are 21 or older, you may report your total household income.8

 

The Takeaway

Applying for a credit card can be more like going for a job than a passport. But if you prepare carefully and have a sufficient income and credit score, the odds you’ll be approved are high. Don’t be discouraged if your application is declined. Another bank may approve you. And if there are negative factors working against you, you can correct them and apply again.

Allan Halcrow

Allan Halcrow is a freelance writer concentrating in business, human resources, and diversity and inclusion. He is also the author of four books on management.

 

All Credit Intel content is written by freelance authors and commissioned and paid for by American Express. 

The material made available for you on this website, Credit Intel, is for informational purposes only and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.