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This article was last updated Oct 22, 2018, but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.
You’ve decided to take the plunge and get a credit card. Thanks to the internet, it’s pretty easy to choose a card, apply for it and get a quick response. But what goes on behind the scenes between the time you submit your application and the time you’re approved — or rejected?
When it comes to applying for a credit card, there are things you can do to position yourself for approval. Nothing is guaranteed, but if you take these steps, your odds of getting that card will be better. We’ll not only walk you through the process, but we’ll also point you to resources that can help put your credit card application in the best possible light.
Research your credit card options
Because there are so many cards on the market, you need to do your homework. Think hard about how you’re going to use that card. Look at factors like:
The minimum credit score required for approval. Why bother applying for a card that requires excellent credit when you know your credit score isn’t quite up to snuff? Plus, your credit will take an unnecessary hit. You can check your score for free at sites such as Discover Scorecard or LendingTree, the parent company of CompareCards.
The APR. The truth is, most of us don’t pay off our credit card balances every month, so it’s important to know how much it’s going to cost you to carry a balance before you apply. Check to see if the card offers an intro APR on purchases or an intro APR on balance transfers. These can reduce the cost of borrowing for a temporary period. But, of course, pay close attention to the ongoing APR as well.
The rewards. What are you getting for spending on a card? Is it cash back, points or miles? How many ways can you redeem them? Choose a card that best fits your lifestyle so you can maximize any rewards.
The fees. You need to know how much the card will cost you. If there is an annual fee or foreign transaction fees, for example, you need to balance it with the rewards and perks that come with the card.
The perks. Many cardmembers have no idea about the power of the cards in their wallets. It pays to do your research. Look for things such as travel and purchase protections, concierge services and ways to get early access to entertainment events such as concerts and sporting events.
After you do the research, consider card features that best fit the ways you spend. If you’re a frequent flyer, it only makes sense to go for a rewards-based travel or airline-branded credit card. If you only use your oven for clothing storage, you may want a card that gives you rewards for restaurants and food delivery services.
Check out our guide What Credit Card Should You Get?
You can also review a slew of credit cards on our website. Navigate to the top of the page to review cards by card category, card type or credit quality.
Using the above factors, make a list of your top cards. Then use our compare cards tool to help choose the best card for you.
Be honest about your household income
Credit card companies want to make sure you can afford your debt, so they’ll ask for your household income when you apply. Household income isn’t just your annual salary. It can also include additional income from a spouse, freelance work, Social Security, retirement benefits, child support, alimony, investments, disability payments and workers’ compensation.
If you’re declined for a card, you can appeal to the credit card company. Having documentation on hand to provide evidence of income will be helpful since you may be asked to share it. We’ll cover that below.
Read the fine print
Once you’ve chosen a credit card, dive into the terms and conditions. Look beyond the card’s hype on its homepage and dig into the terms and conditions that will tell you whether it’s the right one for you. Check for things such as:
- What you need to spend to earn the sign-up bonus
- The number of points or cash back you earn in the top spending categories (if applicable)
- Intro and regular purchase/balance transfer APRs
- What you’ll pay in fees and penalties
- Caps and expirations on points, miles or cash back
If this deep dive leaves you disliking your chosen card, revisit your list from Step 1 and see if there’s another card that better suits your needs.
Understand the impact of your application
When you apply for a credit card, the issuer will want to see your credit report. Some credit card issuers will prequalify you by doing a soft pull of your credit, which doesn’t affect your score. Here’s a handful of credit issuers that offer prequalification tools: Bank of America; Citibank; Discover; and U.S. Bank.
Once you’re prequalified for a card or you didn’t need to be prequalified, you’ll have to submit an application which will do a hard pull that will appear on your credit report. If your report shows that you’ve had a lot of hard credit pulls in a short time, your score may be negatively impacted, so don’t apply for new credit too often if you can help it.
What to do if your credit card application is rejected
If your application is denied, there are many reasons why, including not having enough income, having a high credit utilization score, not being on your job long enough, having too many other cards, too many hits on your credit report or not making enough payments or not making them on time.
The answer might also lie in your credit report. Perhaps you’ve had fraudulent activity that is negatively impacting your report and you need to dispute it with the credit bureaus to get it removed. You’re allowed to get a free copy every 12 months from the three nationwide credit reporting companies — Equifax, Experian and TransUnion. You can download them online from AnnualCreditReport.com. Carefully review all three and make sure the information is accurate, complete and up to date.
Credit reporting bureaus have 30 days to investigate your dispute and forward all the relevant data you provide about the inaccuracy to the organization that provided the negative information. Once it’s complete, the credit reporting company must give you the results in writing, along with another free copy of your credit report if your dispute results in a change.
If you haven’t resolved your dispute after an investigation, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the credit reporting company to give that statement to anyone who received a copy of your report in the recent past, although you will have to pay a fee to do it.
If you feel a rejection was a mistake, you can also call the credit card company, ask to speak to a customer service representative and make a case to have the rejection reversed.
Even after going through all these steps, you may still be rejected for a credit card. If you’re unable to qualify for a credit card, you may want to do a deep dive into our guide on managing your credit score or consider cards suited for those with no credit or bad credit.