If you are asking how to apply for a credit card and get approved, there are simply some main answers that are understanding the credit score, debt and income, and strategically apply for a card that fits your profile.
Applying for a credit cards is sometimes as simple as filling up your information on an online form and tapping on “Submit”. However, not everyone can get approved that simply. For some people and some necessity, there are a little know-how and planning before you apply.
On this article, you will learn how to apply for a credit card so you’ll get approved easily and quickly. Read carefully each of the procedures and suggestions we share in the review below and you’ll get what you want about applying for a credit card and get approved soon.
- 1 Understand Your Credit Scores
- 2 Access Your Credit Score
- 3 What If You Don’t have A Credit Score?
- 4 Improve Your Credit Score
- 5 Prepare for Questions You’re Required to Answer
- 6 Apply for A Credit Card Strategically
- 7 Never Give Up
- 8 Learn About Credit Card Terms
- 9 Information You Need To Apply for A Credit Card
- 10 Conclusion
Understand Your Credit Scores
The first and primary procedure to apply for a credit card is how to understand the credit scores. Credit scores are the important factors in a credit card’s issuer’s decision to grant you an approval. This way, banks have their own way of approving but the scores are typically has the following classification.
- 300 – 629 is considered as the “bad credit”
- 630 – 689 is considered as the “average credit”
- 690 – 719 is considered as the “good credit”
- 720 – higher is considered as the “excellent credit”
Based on the classification, you will be get approved if you have a credit score between 670 and 850.
Most rewards provided by credit cards definitely require good or excellent scores. If they are lower, you may delay applying for a credit card until your credit scores are improved.
Access Your Credit Score
There are two kinds of scoring models that are mostly used in the world of credit card application. They are FICO Score and VantageScore. To know your FICO Score, you can access MyFICO.com elsewhere for free. For example, if you have already a credit card then you can access to get free FISCO scores on your online account every month.
There are some personal finance website offering a free credit score form VantageScores like NerdWallet. Both FICO Score and VantageSCore has the same way of being tracked as the have mostly the same factors along with the same data from the credit bureaus.
To monitor your account annually, you can access free credit score information that is updated weekly.
What If You Don’t have A Credit Score?
As checking the credit score and make a good situation on it is an important step recommended before application, a big question is; what if you don’t have a credit score?
Perhaps, you are just starting out with a credit but there is no score yet. So you should look for a credit card that doesn’t require any credit history such as a secured credit card. This type of card will help you build a credit score so you can apply for a better credit card later. For example, if you have had a credit score in a good or excellent range which is 670 to 850, you will have more options to choose form like rewards cards. Rewards cards offer an opportunities to earn cashback points and miles for purchases. For instance, you could even earn hundreds of dollars back every year or major discounts on flights and hotels.
Improve Your Credit Score
As we have mentioned earlier, the bad credit scores can be improved. Notably, the credit score will rise if you make a payment on time, keep the balances low on the existing credit cards and avoid new debt. An entire of 30% of your credit score depends on how much you owe. High credit card balances are damaging.
Also, make your credit utilization ratio ideal by keeping it below 30% on each credit card. Credit utilization ratio is the balance divided by your credit limit. To keep it below 30%, take an example that you have a credit limit of $10,000 so you have to keep the balance below $3,000.
The credit utilization ratio can be lower by making a plan to pay down an existing balance as fast as possible. Consider paying off the purchases which is more than a month to keep the balance lower throughout the month.
Prepare for Questions You’re Required to Answer
The next procedure on how to apply for a credit card and get approved is to prepare for questions that you are required to answer. When you apply for a credit card, you will be asked the same questions regardless which company is issuing the card. It helps the card issuers to decide whether they approve your application or not. Commonly, you will be required to provide your Social Security Number and credit score that doesn’t reflect your income.
Income will be used by the card issuer to count your debt-to-income ratio. That will be helpful to determine your ability to make payment. Thus, you can improve your ration by not only increasing your income but also increasing your debt.
If you earn money apart of full-time job, you may list it into your card application. As long as you are 21 years old or older, you can list or include your household income on your credit card application like the income from your partner or spouse.
Apply for A Credit Card Strategically
You will never get an approval for creating a credit card if you have a very bad credit. You cannot even get approved a card that offers a large sign-up bonus and lucrative rewards. Each of credit card application can ding your credit score temporarily. Thus, consider using an online tool for a pre-qualification.
Also, you can call the card issuer and ask about requirements of a specific card. If you are not lucky in pre-qualification, there are some other options of good cards for people that have a bad credit. The cards will help you get closer to a qualification in obtaining rewards card over time. Use the card responsibly so you can mend your credit.
You may have already had an easier time to get approved for a secured credit card that uses a cash deposit you create upon approval to “secure” your line of credit. In this case, there are some of the secured cards that offer a cash rewards, flexible deposits amounts and the chance to upgrade to an unsecured card. This will allow you to get your deposit back.
Never Give Up
If you think you have done everything to apply for a credit card but your application has not been approved yet, call the card issuer and ask for consideration.
Make a plan to call! This way, you have right to ask the issuer why your card application was denied. Check also your free credit report at AnnualCreditReport.com to know whether there are any blemishes on your history.
Draw a convincing arguments for why you apply for card and why you are fiscally responsible. Be polite and keep your attitude. The customer service agents will positively respond if you have a pleasant personality and attitude.
If you have still no luck, wait for about six months as the credit card application can increase your opportunities to get approved.
Learn About Credit Card Terms
Applying for a credit card and getting approved need also to learn about the credit card terms. Here are some of the terms that you should know what they means.
- Annual fee
Come card issuers commonly charge annual fee for the use of a credit card. Some credit cards that charge annual fee are usually those that come with the luxury perks like the rewards and travel cards. Annual fees typically start at $95 but the issuer sometimes waive them for the first year for the new cardholders.
APR stands for Annual Percentage Rate. It refers to the interest that the issuer apply to your credit account in the period of billing cycle. This interest must be paid if you pay the bill late. APRs commonly vary depending on the prime rate. For example, APRs cover certain range from 15,99 percent to 22.99 percent.
- Balance Transfer
A balance transfer is a term when you move your debt from one account to another. If you pay off the debt, you can transfer your debt to a card that has lower interest rate
- Penalties Fees
Penalties fees are the fees that you must pay of you pay the bill late. Or, your payment is returned when you surpass the maximum limit on your credit card.
- Rewards Rate
Rewards rates usually come as cash back, points or miles. These rewards are offered by a credit card from every purchases you make.
- Cash Advances
A cash advance is actually a loan that you can take out regardless your credit card limit. Though it is nearly similar to taking out of cash from ATM with a debit card, a cash advance is subject to a high APR and transaction fees.
- Foreign Transaction Fees
If you are going to use the card outside the US, you will be charged a fee of each transaction you make outside the US. Usualy, the fees are around 3%. However, if you travel to other countries a lot, you had better look for a credit card with no foreign transaction fees.
- Welcome Bonus
Welcome bonus is usually provided for new cardholders when they sign up for a new card. Typically, it comes also with a cash back, points and miles when a new cardholder spends a certain amount of new card over a quantified period of time.
A welcome bonus may also refer to a welcoming offer and intro-bonus or sign-up bonus.
Information You Need To Apply for A Credit Card
Before you apply for a credit card, there are information that you should know to help yourself process to go smoothly, leading you to a better idea and opportunities to get approved easily.
The information includes your full legal name, date of birth, address, annual income and social security number. These information will serve the basis for your application. Other additional details you should also prepare are the car issuer, the main source of your income and any assets you have.
All in all, there are always so many ways on how to apply for a credit card and get approved but being denied can hurt. That’s due to the fact that it can affect the credit scores. That’s why it is important to take stock of your credit condition before applying for a credit card and choosing the best card.
Also, it is highly recommended that you give your accurate information during the process of credit card application. This will help the issuer to consider approving you immediately.