Credit cards are great financial tools. Not only can they finance your everyday purchases, but they help you build credit while earning you rewards and benefits.
With the number of cards on the market today and the varying qualification standards between them, it’s important to know how to apply for a credit card so you can actually get approved. Read on to learn the ins and outs of applying for a credit card.
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How to apply for credit cards in 7 steps
Applying for a new credit card actually comes at a cost (which we’ll explain in detail later), so you want to go into your card application armed with the right information and action plan. That way you won’t need to do it more than once.
Here are the 7 steps to follow when applying for a credit card.
1. Check your credit score
Whenever you go to open a new line of credit (whether it’s a credit card or a loan), you should first check your credit score. Knowing where your credit stands will help you determine which cards you can qualify for, so you don’t waste time applying for cards outside of your credit score range.
Although credit card issuers look at a range of factors to qualify you for a new card, credit score is often the most important. To see your current score, you can:
- Pay for your FICO or VantageScore credit score online
- Use a credit score site (free or paid)
- See if your current credit card issuer offers free credit scores
You can also download a free credit report every 12 months from each of the major credit bureaus by going to AnnualCreditReport.com. Keep in mind that this report will give you a good overview of your credit standing, but won’t necessarily include your credit score.
How to tell if your credit score qualifies for a card
Many credit card issuers aren’t transparent about the minimum credit score required for card qualification. If you have good to excellent credit (a score between 670 and 850), you can qualify for most credit cards, including rewards cards and travel cards, which usually require higher scores.
If you have poor credit (300 to 600), your options will be more limited. You’ll likely qualify for secured cards and other credit cards for bad credit.
If you have fair credit (601 to 669), you can qualify for the same cards as poor credit applicants, as well as unsecured credit cards and store cards.
These aren’t hard and fast rules, so it’s worth shopping around for a card that suits your needs. However, lower credit scores tend to merit less favorable interest rates (known as APRs) and higher fees (e.g., annual fees).
What to do if you don’t have a credit score
If you’re a new borrower and don’t yet have a credit score, don’t worry, there are still cards available to you.
Consider a card from one of the following lists:
As mentioned, many new borrowers will also qualify for secured credit cards, which require a security deposit, but are designed to help borrowers build their credit scores.
2. Decide what type of card you need
Credit cards offer different rates, fees, rewards, costs, and features for you to consider. Before you start applying for cards, limit your search to what type of card will satisfy your borrowing needs.
Ask yourself the following:
- How much can I pay to open a card? (Choose cards with security deposits, opening fees, annual fees, and application fees that meet this budget.)
- Can I afford annual or monthly fees? If you can’t commit to an annual investment, consider cards with no annual fee.
- Do I frequently carry a balance on my card? (Choose cards with good APR if your answer is “yes.”)
- Do I want to earn rewards? (Of course everyone wants cash back, but it may come at a cost. For example, rewards cards may also have annual fees.)
- What kind of rewards do I want? (Rewards can come in the form of cash back, statement credit, air miles, store credit, and vouchers.)
- Do I need to use this card abroad? (If you do, look for a Visa or Mastercard credit card, and consider finding one without foreign transaction fees.)
3. Learn about the credit card terms
When shopping for the right credit card, it’s important to understand credit card terminology so that you can make the best decision. Here are the most common terms you’ll see when shopping and applying for a credit card.
- Annual fee: Some credit cards come with an annual fee. How expensive a credit card’s annual fee is varies by card and issuer. Cards with valuable rewards programs often come with an annual fee, as do cards available to borrowers with bad credit scores (to help offset lending risks).
- APR: Credit card APR (annual percentage rate) is the yearly interest rate on a credit card. If you don’t pay your monthly balance in full by the due date, you’ll need to pay interest. The monthly rate of interest you pay will be roughly the APR divided by 12. Note that credit cards actually have multiple APRs that apply in different circumstances, and the main one that your card issuer advertises may be also called the regular APR or purchase APR.
- Balance transfer: A balance transfer is the act of moving debt from one card to another. It’s a common form of debt consolidation, but usually comes at a cost. Many credit cards have balance transfer fees as well as a special balance transfer APR.
- Cash advance: A cash advance is when you take money out of an ATM using a credit card. Similar to balance transfers, cash advances have their own fees and APR. As cash advances are immediate, short-term loans, their APR is usually high.
- Late fee: A late fee is the fee you’ll be charged if you fail to pay your minimum monthly payment by the due date.
- Minimum interest charge: If you carry a balance on your credit card, you’ll be charged interest. Even if you leave a very small amount unpaid, you’ll likely incur a minimum interest charge. This varies from card to card, but is often $1.
- Penalty APR: If you’re late on your credit card payment, you may be charged a higher interest rate, known as a penalty APR.
- Rewards rate: A rewards rate is the rate at which you earn points, cash back, miles, or other rewards on a credit card. Rewards rates are usually earned on each dollar you spend (e.g., 1% rewards rate = 1 mile per dollar), but once again are variable based on the card.
- Welcome bonus: Many cards offer welcome bonuses as an incentive to open an account. Rewards cards and retail cards are the most common issuers of welcome bonuses, as they often come in the form of additional points or store discounts.
- Introductory APR: Similar to welcome bonuses, some card issuers offer an introductory APR to incentivize new cardholders. This intro APR is usually very low or 0%, but it only lasts for a designated period of time, usually 6–18 months.
- Foreign transaction fee: Some cards charge foreign transaction fees if you use the card outside of the US. However, there are also cards available that don’t charge these fees as an incentive for frequent travelers.
4. Choose where to apply
Before you choose the specific card you want to apply for, consider where you want your card to be issued from.
For example, applying for a credit card issued by a bank you already have an account with may help your application get approved. Similarly, you can apply for a better card offered by your current credit card issuer and may be more likely to qualify, especially if you’ve proven yourself a responsible borrower.
You can also look at the perks offered by major credit card companies. For example, Capital One offers travel protections and free credit scores to all cardholders.
5. Prepare for a small drop in your credit score
As mentioned, applying for a new credit card poses a slight risk to your credit score. When you apply, many card issuers will check your credit by triggering something called a hard inquiry.
Hard inquiries take several points off your credit score and can stay on your report for up to two years. However, the effects aren’t serious, and they’ll usually fade considerably sooner than that (often within three months).
Technically speaking, you can apply for credit cards as often as you want, and a hard inquiry or two won’t tank your credit score—however, the effects of too many applications within a short span of time can add up. So only apply for new lines of credit when you need to, and be selective about which credit cards you apply for.
6. Check for pre-approval
If you’re worried about getting a hard inquiry on your credit report, you can limit your risk by seeing if you’re pre-approved for a card before actually applying.
Pre-approval is offered by many card issuers and checks that you meet the requirements to borrow using a specific card. Unlike the actual application, pre-approval often triggers a soft inquiry—a type of credit check which won’t harm your credit score.
Keep in mind that pre-approval doesn’t absolutely guarantee you’ll qualify for the credit card. It just confirms you’ve met the broad application criteria.
7. Have a repayment strategy and use the card responsibly
While a credit card is a great financial resource, it can quickly become a financial burden if you don’t use it properly.
Before committing to opening a new card, have a plan in place for paying your bills on time and in full each month. Doing so will prevent you from incurring late fees and interest charges, and will protect you from drops in your credit score.
Not only do you want to pay your bills on time, but you also want to keep a good credit utilization rate (the amount of your credit that you’re using) by not taking out too much money on your card each month.
Credit utilization is calculated by dividing your current balance (across all your cards) by your total available credit. You want this number to be low, ideally under 30% or even 10%, to maintain a good credit score.
What do you need to apply for a credit card?
To apply for a credit card, you’ll likely need to provide the card issuer with the following information:
- Personal information such as your name, phone number, email address, Social Security number (or another ID number if the card is available to non-US citizens), and date of birth.
- Your address (PO boxes are usually not allowed).
- Employment status.
- All sources of income, which lenders will use to calculate your debt-to-income ratio and determine your ability to make payments on the card.
- Financial assets, like property you own.
- Financial liabilities, like debts you owe (e.g., alimony, child support, etc).
Like other aspects of choosing and applying for a credit card, the required information varies based on credit card issuer.
As much of the information you’ll need to provide is sensitive, ensure you’re applying on a secure site.
Can anyone qualify for a credit card?
You must be at least 18 years old to qualify for a credit card. However, getting a credit card at 18 (or any age below 21) isn’t that simple—under the Credit Card Accountability Responsibility and Disclosure Act of 2009 (credit CARD Act), you’ll need to have a cosigner or show that you have a source of independent income. 1
Additionally, many credit card companies require applicants to prove they have a steady source of income. However, there are cards available to students and those with unstable finances.
If you find yourself unable to qualify for a credit card, you can become an authorized user on someone else’s credit card and enjoy the same benefits while building your own credit.
Can you get a credit card for free?
Yes, you can get a credit card for free. Many credit cards come without application costs, annual fees, or security deposits. However, these options are more commonly available to borrowers with good credit.
Even if your credit is poor, fair, or limited, there are cards available that are free to get.
However, all cards—even those without any fees—can end up costing you money in interest if you don’t pay your monthly bill on time and in full.
What to do if your credit card application is denied
In accordance with the Fair Credit Report Act (FCRA), lenders are required to tell you why your credit card application was rejected. You may be given this information immediately if you applied online or over the phone, or you may need to wait for an adverse action notice to come in the mail (which usually takes 7–10 business days). 2
Once you understand why your application was rejected, you can begin taking steps to amend the situation. For example, many applicants are denied because they don’t have a long enough credit history. If this applies to you, you can consider becoming an authorized user or seeking out cards that are marketed to credit builders.
If you didn’t qualify because of a low credit score, you can easily improve your credit score and re-apply in 6 months or a year.
