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.

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 eight steps.

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.

2. Determine what type of card you need

If you’re a first-time applicant, it’s probably a good idea to shoot for a card with low or no annual fees and a low interest rate. If you have no credit history at all — or you’ve had trouble getting approved for an unsecured credit card in the past — you might still qualify for a secured credit card, which requires a security deposit and is commonly used to build credit.

3. Understand the terms on your credit card application

Once you’ve decided on the type of card you want to apply for, you’ll come across some credit card terms on the application or in the credit card’s terms and conditions. These include:

Annual fee — This yearly fee, charged by the card issuer, lets you use the card and reap any associated benefits, like cash back rewards.

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 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.

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.

Penalty fees — 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? 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.

5. Check to see if you’re prequalified

Some issuers allow you to see if you’re prequalified for their credit cards. You typically need to fill out a short form and submit personal information, including your Social Security number. This triggers a soft inquiry, which 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 being fully approved will depend on other factors, including your income.

6. Prepare for a knock to your credit

When you apply for a new credit card, it usually triggers what’s known as a hard inquiry on your credit reports. 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.

7. Use credit card best practices

If you get approved for a card, congratulations! Educate yourself about credit card best practices, such as making full, on-time payments and keeping your credit usage low.

What if your application is denied?

First of all, don’t despair. Many people have been rejected for credit cards, and many have later been accepted for other cards. 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. 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.