How to apply for a credit card and get approved

Confident young woman filling out a credit card application that will definitely be approved.Image: Confident young woman filling out a credit card application that will definitely be approved.

In a Nutshell

While getting approved is never a guarantee, a successful credit card application starts with knowing your credit scores and choosing the right card.
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Applying for a credit card — and waiting for approval or denial — can feel as scary as taking a final exam or giving a public speech.

Knowing how to apply for a credit card is one thing, but knowing what issuers are looking for before you apply for a new card is really the first step to success.

Before you apply, be realistic with your expectations. If you’re applying for your first credit card, it’s unlikely that you’ll get a large credit limit — and that’s OK. Building credit is a process, and you have to start somewhere.

Just remember: Depending on your credit (what lenders might refer to as your “creditworthiness”), you may not be ready to apply for a credit card right now, but you can take proactive steps that may help you get approved in the future.

If you think you’re ready, we’ve outlined how to apply for a credit card in seven steps. It all starts with checking your credit. 

Here are the steps to apply for a credit card…

  1. Check your credit scores
  2. Determine what type of card you need
  3. Understand the terms on your credit card application
  4. Choose where to apply
  5. Check to see if you’re prequalified
  6. Prepare for a knock to your credit
  7. Use credit card best practices

…and what to do if your application is denied.

1. Check your credit scores

Knowing your credit scores and what’s on your credit reports can help you determine what products to apply for. If you have fair credit, for example, you may not want to apply for a card that clearly states that only applicants with excellent credit will be approved.

Take some time to review your reports. As the Consumer Financial Protection Bureau notes, your credit reports may contain errors, such as old collection accounts that should have already dropped off your reports, that could prevent your application from being approved.

Learn how to dispute an error on your credit report

2. Determine what type of card you need

If you’re a first-time applicant, it’s a good idea to shoot for a card with low or no annual fees and a low interest rate. You can comparison shop on Credit Karma before you apply to get an idea of what type of card you’re looking for.

If you have no credit history at all — or you’ve had trouble getting approved for an unsecured credit card in the past — consider applying for a secured credit card, which requires a security deposit. Secured credit cards are commonly used to build credit.

If you don’t have great credit but don’t want to apply for a secured card, a retail credit card could be another option for you. But take note: These cards have some drawbacks, including high interest rates and fees, so you’ll want to focus on paying your full balance by the due date whenever possible.

3. Understand the terms on your credit card application

Here are some common credit card terms and definitions to help you make an informed decision on whether to apply.

Annual fee 

This yearly fee, charged by the card issuer, lets you use the card and reap any associated benefits, like cash back rewards. Many cards don’t carry annual fees at all, or waive it the first year, but cards with higher-end perks and rewards often have annual fees.

Annual percentage rate for purchases 

The interest rate reflecting the total annual cost of the interest on your card purchase balance if you don’t pay the balance in full each month.

APR for balance transfers 

The interest rate reflecting the total annual cost of the interest on your credit card balance amount that you transferred from one outstanding credit card to another.

There may be an introductory 0% APR that applies for a limited amount of time, which gives you a chance to pay down your transferred balance interest-free.

Balance transfer fee 

Most credit card issuers will charge you a fee to transfer a balance onto your card. This typically ranges between 3% and 5% of each balance transfer.

APR for cash advances 

The interest rate reflecting the total annual cost of the interest on the cash that you borrow against your credit card balance. Cash advance APRs tend to run high, and the interest starts accruing the day you borrow the cash. There may be better options if you need cash, but if you do take out a cash advance, it’s best to pay it off as quickly as possible before interest piles up.

Cash advance fee

Interest charges aren’t the only cost you’ll rack up when you get a cash advance — many credit card issuers also charge a cash advance fee per transaction. This fee generally ranges from 3% to 5% of each transaction.

Minimum interest charge

The least amount of interest you’ll be charged if you carry a balance on your card from one billing period to the next. It’s normally a small sum, such as $1. If you don’t carry a balance on your card, you won’t face a minimum interest charge.

Transaction fee 

A transaction fee is an amount charged in addition to the APRs associated with your account for each type of transaction that a borrower makes.

One of the best examples is a foreign transaction fee, which some card issuers charge when a cardholder uses a card in another country or makes a purchase from home with a foreign vendor who runs the transaction in a currency other than the U.S. dollar.

A foreign transaction fee is generally 3% of the purchase price, but it depends on the issuer and the particular card.

Late fee

A card issuer charges you with these fees when you go over your credit limit or make a late payment.

4. Choose where to apply

Already have a checking or savings account at a bank or credit union? Though it isn’t a requirement, applying for a credit card from a financial institution where you have an account may be a good idea, since you have an established history there. Depending on your account history, it may even improve your chances of getting approved.

5. Check to see if you’re prequalified

Some issuers allow you to see if you’re prequalified for their credit cards. This requires some work on your side — you typically need to fill out a short form and submit personal information, including your Social Security number. This triggers a soft inquiry, which, much like checking your credit on Credit Karma, won’t affect your credit scores.

If you’re rated as “preapproved” or “prequalified,” this means you’ve met all the lender’s criteria so far. But you still need to apply for the card, and full approval will depend on other factors, including your income.

What are the types of information you need on a credit card application?

Here are some details you’ll typically need to supply on a credit card application, whether filling it out online or by mail.

  • Name
  • Address
  • How long you’ve lived at that address
  • Whether you own or rent your home or have another type of living arrangement
  • Country of citizenship
  • Country of residence
  • Phone number
  • Date of birth
  • Social Security number
  • Employment status
  • Gross annual income
  • Sources of income
  • Financial assets and accounts
  • Financial liabilities like a monthly housing payment or other loan payments

Keep in mind that application requirements can vary from issuer to issuer.

How long does it take to apply for a credit card?

Once you’ve gathered all of the documents you need, applying for a credit card typically takes just a few minutes. You may not receive your decision immediately — it may take a few hours or days before you’re approved or denied for the card. And if you’re approved, you’ll likely need to wait a couple of weeks before you receive your physical card in the mail, though some card issuers will give you access to a digital card right after you’re approved.

6. Prepare for a knock to your credit

Applying for a new credit card usually triggers what’s known as a hard inquiry on your credit reports. Hard inquiries generally occur when a financial institution, such as a lender or credit card issuer, checks your credit reports when making a lending decision.

A hard inquiry can lower your credit scores by a few points and may stay on your credit reports for as long as two years. The good news is that a hard inquiry might not affect your scores as much as you’d think, and the impact usually decreases or disappears as time passes.

7. Use credit card best practices

If you get approved for a card, congratulations! A credit card can be a really useful tool to help build your credit over time. But now that you have it, remember that it’s a tool that requires maintenance and attention on your end.

Making full, on-time payments and keeping your credit usage low (preferably below 30% of your total limits) will help you build and maintain a positive credit history.

What if your application is denied?

First of all, don’t despair. Being rejected for a credit card doesn’t mean you’ll never be able to get one.

Secondly, weigh your options. You might want to try applying for a different traditional (unsecured) card. Or you might consider applying for a secured credit card, which requires a cash deposit that becomes collateral for your account.

But be very selective about additional applications, as each triggers its own hard inquiry that may hurt your credit.

About the author: John Egan is a blogger, content marketer and freelance writer in Austin, Texas. He is former editor in chief at Austin-based startup LawnStarter, and he previously worked at the Austin Business Journal, Bankrate and S… Read more.