How to Apply for a Credit Card in 4 Easy Steps
If you’re wondering how to apply for a credit card, the good news is there a just a few simple steps in the process. This guide will walk you through finding out your credit score, analyzing your spending habits to choose the right card, and filling out an application online or mailing one in.
Having the right credit card can help you establish a strong credit score as well as earn rewards or cash back. These days, applying for a credit card is easy because it can be done entirely online, although you can still submit a paper application via mail if you want to. However, filling out an application doesn’t guarantee you’ll be approved — credit card issuers will evaluate you based on a number of financial factors.
If you’re new to credit cards or are unsure where to start, here’s how to apply for a credit card for the first time.
In this guide:
- Applying for a Credit Card in 4 Steps
- More Information About Applying for a Credit Card
- Check Out These Cards to Get Started
Applying for a Credit Card in 4 Steps
Here is a summary of the four steps that will be discussed below.
- Get Familiar With Your FICO Credit Score
- Analyze Your Spending Habits
- Choose the Card You Want
- Gather Your Information and Apply
1. Get Familiar With Your FICO Credit Score
Your FICO credit score is a three-digit score ranging from 300 to 850. It’s the most popular credit score used by card issuers to evaluate your creditworthiness as a potential cardholder. You can get your FICO score for free using websites like Mint and Credit Karma, and many credit card brands such as Discover also provide free access to your score. You’re also entitled to one free copy of your credit report annually from each of the three credit bureaus — Experian, Equifax, and TransUnion.
Knowing your FICO score can help you narrow down the cards for which you should apply. Some credit cards, such as the U.S. Bank Cash+ Visa Signature Card, are only available to cardholders with good credit. In fact, many of the credit cards with the most generous rewards and signup bonuses are limited to people with high FICO scores.
The good news is there is a credit card available for just about everyone — even if you’ve never used credit before or if you have a spotty credit history. If you can’t qualify for your ideal credit card right away because your credit score isn’t high enough, you can apply for a card that caters to people trying to establish a credit history for the first time or rebuild their existing credit. By using credit responsibly, you can build a solid payment history and eventually qualify for the card you really want.
>> Read More: How to build your credit with a credit card
It’s also important to try to pay down as much debt as possible if your credit score isn’t as high as you’d like it to be. Your credit utilization ratio, or the amount of credit you’re using in relation to the total amount of credit available to you, accounts for 30% of your FICO score. The lower your utilization ratio — or the less debt you have — the higher your score will be.
2. Analyze Your Spending Habits
Evaluating your spending habits is key to knowing what your budget looks like, which comes in handy in multiple ways when thinking about the kind of credit card you should get. First and foremost, you want to make sure you don’t spend more than you can afford once you start using credit. If you’re overspending every month, you may want to make tweaks to get your spending under control so you’re less likely to rely on your cards to fill the gaps — which is a sure recipe for disaster.
You’ll also want to see where the bulk of your money is spent so you can try to find a credit card that will reward you for the spending you do most. If you spend a lot of money at gas stations and grocery stores, it would make sense to look for a card that provides cash back or rewards points for that kind of spending.
>> Read More: Best credit cards for groceries
Finally, many credit card companies offer bonuses for new cardholders when they meet certain spending requirements within a particular timeframe. For example, the Capital One Venture credit card offers new cardholders $50,000 bonus points after they spend $3,000 on purchases within the first three months of account opening.
You need to have a rough idea of what you spend each month because there’s little use getting a new card that offers a huge signup bonus if you won’t spend enough to qualify for it — or if you can’t pay off your credit card balance in full so you don’t incur interest charges.
3. Choose the Card You Want
With information about your FICO score and your spending habits, you can make a more informed decision about the kind of credit card you’re likely to qualify for — and which one will best serve your needs and goals.
There are tons of different unsecured credit cards out there, including cards offering cash back, travel rewards, 0% introductory balance transfers, statement credits, and more. There are also cards with low APRs or cards aimed at students looking to build credit. You should look for a card that offers rewards you’ll actually use. But if you think you’ll need to carry a balance at times, you should also prioritize finding a card with a low APR — the interest you pay on a card is likely to cost you far more than the rewards you earn.
It may be tempting to apply to lots of different credit cards, especially since many come with generous signup bonuses. However, you should apply for just one card at first. This is important because each time you apply, credit card companies pull your credit profile, resulting in a hard credit inquiry that will stay on your report for two years.
Too many inquiries signal to the credit bureaus that you might be a risky borrower — according to myFICO, people with six or more inquiries are eight times more likely to declare bankruptcy than people with no inquiries. Each hard inquiry results in a slight decrease in your score, reducing your chances of getting approved for the best credit cards or other loan products. Even if you are approved, you’ll typically face higher interest rates.
4. Gather Your Information and Apply
Once you’ve identified the card you want, you’ll need to provide certain information to the card issuer. This includes your name, address, and Social Security number, among other details. If you haven’t lived at your current address for at least two years, you’ll probably be asked to submit a previous address as well. The application may also ask about your current income.
In most cases, the easiest way to apply for a card is to submit your application online. Virtually every credit card issuer allows online applications, and you can usually receive a decision quickly — sometimes within minutes.
If you’d prefer to complete the forms manually and mail them in, this is typically an option, too, although it will take longer to receive a decision.
More Information About Applying for a Credit Card
We’ve covered the main steps to apply for a credit card, but you probably have other questions about how the application process works. Here are some answers to the questions you’re most likely to have.
If you apply via mail, the approval process can only move as quickly as the postal service. You’ll have to wait for your application to arrive, then the card issuer will have to process it, make a decision, notify you, and send you the card if you were approved.
When you apply online, the process is faster because the credit card company receives your information instantly and can often approve or deny you within minutes, although it takes longer in some cases. Once you’re approved, the time it takes to receive your card will vary by card issuer, but it’s usually within a few weeks.
In general, you cannot apply for a credit card until you reach the age of majority, which is 18 in most states. However, once you’ve reached the age of 18, getting credit may remain a bit more challenging until you turn 21, thanks to the Credit Card Accountability Responsibility and Disclosure Act of 2009.
Called the CARD act, this federal law set special rules for granting credit to anyone younger than 21. Card issuers cannot give credit to anyone who is under 21 unless they can prove they have enough income to pay the card (or unless they have an adult cosigner). Card companies offering free gifts to entice young people to apply for credit must also remain at least 1,000 feet away from college campuses.
If you’re too young to get credit on your own, you can have an older family member add you to their credit card as an authorized user. Although you aren’t legally responsible for making payments as an authorized user, the primary cardholder’s record of on-time payments can help you start building credit early so you can apply for your own card once you’re old enough.
You may come across some unfamiliar terms when applying for the best credit cards, especially if it’s your first. Below are some explanations of the jargon you’ll likely to see during the process.
FICO Credit Score
Your FICO credit score is the three-digit number assigned by the Fair Isaac Corporation based on a proprietary formula. The score is used by card issuers and other lenders when evaluating your creditworthiness as a potential customer. The higher your credit score, the more likely you’ll be approved for credit at an affordable rate.
Although your FICO score is just a number, your credit report is a detailed history of all aspects of your credit usage. There are three major credit bureaus that prepare these reports: Equifax, Experian, and TransUnion. Each one collects information from lenders and others you do business with about your borrowing history, requests for new credit, your overall debt total, and record of on-time or late payments.
Lenders look at these reports when evaluating your credit applications. You should check your credit report regularly for mistakes, and can do so for free at AnnualCreditReport.com.
Your credit limit is the amount of credit extended to you by a credit card issuer. It refers to the total amount you can charge on your card — if you have a $5,000 limit, you can charge up to $5,000.
New cardholders typically start with a small credit limit, sometimes as low as a few hundred dollars. As you demonstrate responsible credit use over time, your credit limit should rise, which helps lower your credit utilization ratio and increase your score.
Credit utilization refers to the amount of your credit limit you actually use relative to what’s available to you. If you have a $5,000 credit limit and charge $2,500, you’re at a 50% utilization ratio. If your credit utilization ratio climbs above 30% of your total available credit, your credit score will suffer because it gives the impression you can’t handle your spending and are relying on credit too much.
Annual Percentage Rate
Your annual percentage rate (APR) encompasses the overall cost you pay when carrying a balance on a loan or line of credit. APR is a more accurate measure of the cost of borrowing than the interest rate alone because it takes fees into account and considers how often interest compounds.
Some credit cards offer 0% introductory APRs, which means you’ll pay no interest on purchases and/or balance transfers for a specified timeframe, usually around 12 months. However, standard credit card APRs are generally very high.
Because you pay a lot to borrow, you don’t want to carry a balance on your credit card. Be careful if you take advantage of a low intro APR — once the intro period ends, interest kicks in on the remaining balance. To make sure you don’t end up incurring interest charges, it’s usually best to avoid spending more than you can afford to pay off each month, even with a 0% card.
Some, but not all, credit cards charge annual fees for being a cardholder. Typically, cards with an annual fee offer more generous rewards that can sometimes make the fee worth it. However, you’ll usually have to spend a fair amount of money to earn enough rewards to outweigh the upfront cost. For a first credit card, it’s probably best to keep things simple and go with a no-fee card with an easy-to-understand rewards program.
Foreign Transaction Fees
Some credit cards also charge a fee for using your card abroad or making purchases from overseas companies that charge you in foreign currency. Such foreign transaction fees are usually 3% of the purchase. You’ll want to avoid the fee if possible, so look for a card that doesn’t charge a foreign transaction fee if you frequently shop or travel outside the country.
Check Out These Cards to Get Started
If you’re ready to start applying for credit cards, these are some of our favorite starter cards you should consider. They offer cash back with every purchase and don’t have high credit score requirements, so you may just find the perfect card for you.
Platinum Card from American Express
- Intro Bonus: 60,000 points after spending $5,000 in first 3 months
- Annual Fee: $550
Author: Christy Rakoczy
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