Credit cards can be powerful tools for building a strong, reliable credit profile. A higher credit score won’t just improve your ability to get a new credit card. It will also affect the rates you’re offered on other financial products, like car loans and mortgages. A little preparation and a lot of knowledge can go a long way when it comes to applying for a new card.
Check Your Credit Score
Know your credit score. A credit score is a three-digit number calculated to determine the relative quality of a consumer’s credit history. You can check your credit score through a credit card issuer or by ordering it from any of the three main credit agencies: TransUnion, Equifax or Experian. You’re entitled to at least one free credit score from each agency per year.
Your credit score is affected by many factors, such as your payment history, outstanding balances, credit utilization and credit line history. Each bureau uses a slightly different model, so expect slight differences in score from agency to agency. The scores should all be within a narrow range, so if one skews significantly from the others, look for a mistake you should correct.
If your score significantly differs from what you think it should be, carefully review your credit report. Look for errors or delinquent payments that might be dragging down your score.
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How Do You Check Your Credit Score for Free?
By law, you’re entitled to check your report for free once a year at AnnualCreditReport.com for a detailed report from each of the three major credit bureaus. This will give you a detailed report of your credit history from each of the three major reporting bureaus. You can also get a free report once a week from each bureau.
Many major credit card companies, financial institutions and loan servicers offer a monthly credit score for no extra fee for cardholders. You can often simply log in to your account and check your credit score. Keep in mind, different issuers use different scoring methods which means you may have slightly different scores across different cards.
What’s a Good FICO Score?
Lenders use your credit score to assess the level of risk you’ll pose when it comes to paying down your balance. Many lenders use a FICO scoring model to generate your three-digit number. The higher your score, the better the offers you’ll generally receive.
Defining an exact threshold for what constitutes a good credit score can be complicated because it depends on the scoring model the lender uses and the type of loan you’re applying for.
Base FICO Score Credit Ranges
What’s a Good VantageScore?
Launched in 2006, VantageScore is a joint venture between the three major credit reporting agencies.
VantageScores use the same 300 to 850 credit score range as FICO Scores. The higher your credit score on the VantageScore scale, the lower the risk you represent to lenders. VantageScores define 661 to 780 as its “good” range and 781 to 850 as “excellent.”
How To Improve Your Credit Score
You can take steps to improve your credit score. First, check your credit report for any mistakes.
The next move is to make sure you make your monthly payments on time, every time. Your payment history is the biggest contributing factor to your score, accounting for at least 35% of its calculation, depending on the scoring model.
Finally, aim to keep your credit utilization as low as possible. This means keeping your balance on any card as low as possible relative to the amount of your credit limit on that card. For example, if you have a card with a $10,000 credit limit and you make a $2,000 charge you’d be using 20% of your available credit. Most experts recommend keeping your utilization below 30%.
You may also want to consider using tools like Experian Boost, which can use your on-time payment information for other types of accounts, like utilities or your wireless bill to potentially improve your credit profile.
How To Prequalify for a Credit Card
Many issuers will let you check if you’re prequalified or preapproved for credit cards. Remember that a match from a lender doesn’t ensure approval, but it does mean the lender—guided by some basic credentials—believes you have a good chance.
The lender likely found your information on a credit reporting agency’s list of reliable consumers or did a soft pull on your credit report. A soft pull or inquiry, which is less likely to affect your score, gives a lender access to basic information but isn’t recorded as a hard inquiry, which can negatively impact your credit score.
Documents Required for Credit Card Application
You’ll need to provide your personal information and copies of certain documents to apply for a credit card, including your:
- Legal name
- Social Security number (SSN) or Individual Tax Identification Number (ITIN)
- Mailing address
- Birthdate
- Employment status
- Income information
- Debt information
- Permission to pull your credit history
The Credit Card Accountability Responsibility and Disclosure Act (CARD Act) of 2009 also requires an applicant to be at least 21 to apply for a credit card (or 18 with proof of independent income).
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Improve Your Chances of Approval
Before you apply for a new card, improve your chances by clearing up any outstanding debts. If you have any past due or delinquent accounts, pay them off as soon as you can.
Also, aim to decrease your credit utilization ratio. Being at the limit on your other lines of credit could adversely affect your credit score. Ideally, you should use less than 30% of your available credit across all credit cards and on each individual account. In general, the less of your available credit you’ve used, the better for your overall profile.
Set realistic expectations and look for a card for which you’d likely receive approval. Premium cards are generally designed for those with top-notch credit and the income and resources to nearly guarantee regular payment. If your score is more middle of the road, consider a card meant for those with fair credit or good credit. Over time, your good payment behavior should help increase your score and you may then qualify for a higher-end card.
How To Become an Authorized User
One option if you’re starting to build credit from scratch or if you’re looking to bounce back from credit problems is to become an authorized user on someone else’s account. This means you’ll gain access to a credit card in your name that’s attached to someone else’s account. Typically, a parent will allow a child to become an authorized user on a credit card to get started and to learn responsible credit usage.
The family member or friend authorizing you to use his or her account must notify the card issuer. Name, Social Security number and date of birth are required. Different issuers have different age requirements to add an authorized user.
Things To Consider When Choosing a Credit Card
Once you’re ready to apply, decide which type of credit card will be the best for your needs.
There is no perfect credit card, but considering where and how you spend your money may help you find a match, especially when it comes to category-based reward earning.
Decide Among Low Interest, 0% APR or Rewards
Generally, you’ll want to choose from one of the following options:
- Low-interest card. This type of credit card has a lower-than-average annual percentage rate (APR) and is best if you think you’ll have to carry a balance from time to time, as it will reduce the amount of interest you pay. However, we never recommend carrying a balance if it can be avoided.
- 0% APR card. This comes with an introductory 0% APR offer on either purchases, balance transfers or both and is best for someone with some existing debt looking to pay it down or someone who has to make a big purchase and wants a little breathing room to pay it off.
- Rewards card. These earn rewards in the form of cash back, points or miles based on a percentage of spending. The rates vary. Rewards cards typically require good to excellent credit.
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Cash Back vs. Flexible Reward Points
When deciding between a cash-back card or a flexible rewards card, it’s important to determine if the card’s rewards align with your spending habits. Someone who rarely flies, for example, may not benefit as much from a premium travel card that earns miles redeemable for future flights.
A cash-back card might be the right choice if you want flexible rewards. But for someone who is frequently on the go or wants some travel perks, it might be worth applying for a travel card that offers benefits like airport lounge access or free checked bags.
Issuer-Exclusive vs. Co-branded Credit Card
If you think a travel card is right for you, choose between a general travel card or a co-branded one. A general travel card earns flexible rewards you can use toward any flight, hotel or other types of travel. Examples include an American Express card, which earns Membership Rewards points or a Chase card that earns Ultimate Rewards® points. Cards like these typically earn points that can be redeemed through the issuer’s travel site for travel in multiple ways.
Co-branded cards will earn rewards in the currency of the card’s brand, like Marriott Bonvoy points, Delta SkyMiles or Southwest Rapid Rewards. With these cards, you generally get the most value in using your earnings toward future flights or hotel stays, although in some cases, you can transfer your miles to another airline within the same airline alliance.
How To Get a Credit Card
- Visit the issuer’s website or apply at a local branch or over the phone.
- Submit an application for a new card.
- Await approval.
- Receive approval decision.
- If approved, wait five to seven business days to receive your new card in the mail.
- If denied, consider calling the credit card issuer’s reconsideration line to see if they’ll reverse their decision.
How To Apply for a Credit Card Online: Where Do You Apply?
Usually, the fastest way to apply for a credit card is via the bank’s website. If you’re applying online, you should get an answer quickly. Applying in person or over the phone may lead to a longer wait time.
Think About Your Needs
Before applying, consider your goals with the card. Do you need the card to help establish credit? Earn rewards? Pay off some debt? Knowing your goals will help you narrow down options. For example, if you want an easy-to-use cash-back card, the right fit could offer the same flat rate on all purchases. Someone seeking their first credit card may fare best with a secured credit card.
Preapproval
Sometimes credit card companies will send offers saying you’ve been preapproved, a term often used interchangeably with prequalified. In reality, there’s no way to be approved for a credit card without any action taken on your part.
A preapproval notice means you’re more likely—but not guaranteed—to get approved. If you have a credit card from one bank and you’ve been demonstrating good financial behavior, the bank may send you a preapproval offer for another card.
Be Prepared for the Impact on Your Credit
Nearly all credit card companies—except for a handful targeting people with poor credit—will make a hard pull or hard inquiry on your credit report. This means the bank’s inquiry will appear on your credit report and will likely negatively affect your score.
Too many hard pulls in a short time can adversely affect your credit score, as it can signal to lenders you’re seeking too many lines of credit at once.
Have a Repayment Strategy
Develop a plan to make payments on time. One strategy is to “set it and forget it” by establishing monthly automatic payments from your bank account. You might also make a note in your calendar before the due date to make sure you don’t accidentally skip a payment.
Know the Card’s Terms and Conditions
Before you apply, be sure you understand the card’s terms and conditions listed in the fine print of the cardmember agreement. Once you’re approved, know what credit limit you were approved for, when your billing due date is and what the APR is should you plan to carry a balance. We never recommend carrying a balance—it’s always better to pay in full on time every month if possible.
All credit card agreements are required by law to clearly display a rates and fees table—called a Schumer box after the U.S. senator whose involvement in the Truth in Lending Act led to the standardized format—that clearly outlines any fees associated with your card. Some things you can expect to see in a Schumer box include:
- Annual fee
- APRs on purchases, balance transfers and cash advances (if applicable), and whether those rates are variable
- The minimum amount you’ll be charged each month if you carry a balance
- Any penalty APRs or fees should you miss a payment or pay late
- Balance transfer fees, if any
- Foreign transaction fees, if any
- How your finance charges are calculated
In addition to the Schumer box, you should familiarize yourself with the rest of the card agreement, as it outlines additional details about your card.
If you have a rewards card, the card agreement will outline the rewards rate, what purchases do and don’t qualify for rewards and any other pertinent program details.
If the card has an introductory 0% APR, the agreement will outline the exact details of the offer, including how long you have after opening the card to make a transfer or purchase without incurring interest.
If the card is designed to help improve your credit—as is the case with many secured cards—the agreement may include information about increasing your credit limit with good payment behavior or even how to graduate to an unsecured card.
Credit Card Application Denied: What’s the Way Forward?
If your application is denied, the issuer must inform you—in writing—of the reasons for the decision and tell you which credit bureaus they used to pull your information. If you don’t think the reason you’re given is valid, review your credit report with the bureau(s) the issuer used. There could be an error or outstanding issue you were unaware of. It would also be a good idea to make a reconsideration call if you think an error was made.
If you were denied a credit card because your overall credit rating was too low to meet the card’s criteria, your next step is to work on improving your credit score. Here are a few helpful things you can do:
- If you have any past due or delinquent accounts, pay them off as soon as possible.
- Decrease your credit utilization ratio. If you’re nearly at the limit on your other lines of credit, it will adversely affect your credit score.
- Look for a card more aligned with your credit score. Over time, your good payment behavior should help increase your score and you may qualify for a higher-end card.
- Don’t apply again right away. Although one credit inquiry will have a small impact on your score, multiple inquiries within a short period can have a significant effect. Allow some time to pass before you apply again.
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Bottom Line
Opening a credit card account can be a smart money move, but applying for a credit card you’re not likely to qualify for or getting a card that isn’t a match for your spending habits is often a waste of time. Take the time to determine your credit standing and evaluate what type of card might be best for you.
Frequently Asked Questions (FAQs)
What credit score do I need to get a credit card?
Credit score requirements vary across card issuers and credit cards, so there’s no specific score you’ll need to get approved. In general, though, secured credit cards have lower credit score requirements, while you’ll likely need good or excellent credit to get approved for a premium cash-back or travel rewards card.
How do you apply for a business credit card?
Applying for a business card is easy but requires research. First, determine if your business is eligible. Your business isn’t required to have incorporated in any way to qualify for a business credit card, and the size of your company doesn’t matter for basic eligibility.
You will, however, need to provide the required information, including your business’ name, registered address, annual revenue, number of employees, estimated spending needs and an employer ID number (your own SSN can usually be substituted if your business doesn’t have an EIN). Most issuers will require a personal guarantee for a business credit card.
How often should you apply for a credit card?
There’s no absolute rule for how long to wait between applications. Generally, 90 days will suffice. Each credit credit card company has its own rules on how many cards you can have and the time between applications.
How do you apply for a secured credit card?
As with unsecured cards, you must fill out an application for a secured credit card. The main difference between the two is secured cards will require your bank account and routing number to process a refundable security deposit. The amount you deposit becomes your credit limit.
How do you get a credit card with no credit?
It may be difficult, though not impossible, to get a credit card with no credit. If you start with a secured credit card, you’ll likely have more options. Many secured credit cards have low or no credit score requirements and can help you build credit over time.