Getting approved for a credit card can be a crucial step in building your financial future. Whether you’re looking to establish credit, earn rewards, or manage your spending more effectively, understanding the approval process is key.
This guide will walk you through the essential steps on how to get approved for a credit card, from checking your credit score to selecting the right card for your needs. With the right approach, you can navigate the application process with confidence and improve your odds of success.
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1. Check your credit score
Credit card issuers will look at your credit score during the application process. Many credit card companies have minimum score requirements. If your credit score isn’t in great shape, it’s likely worthwhile to explore ways to build your credit for the best approval odds.
Consumers can request a free copy of their credit reports each year from any of the three major credit bureaus — Experian, Equifax, and TransUnion. You may be able to correct errors before applying for a credit card to possibly add a few extra points to your score.
2. Pay your bills on time
Payment history is the largest component of your credit score. It’s 35% of your total FICO score, so it’s important to only spend as much as you can pay back. While it’s generally good enough to make the minimum monthly payment, you may save a lot of money in the long run by paying off your entire balance each month.
3. Stay below your credit limit
Maxing out on your credit card results in additional fees and declined purchases. Interest will continue to accumulate and can put you in a challenging situation. While many credit cardholders understand the value of avoiding a maxed-out credit limit, you should keep a wide margin.
Credit utilization measures how much of your credit limit has been used. If you have a $5,000 credit limit and a $3,000 credit card balance, you have a 60% credit utilization ratio.
Although this setup gives you an extra $2,000 before you hit your limit, keeping a high credit utilization ratio will likely hurt your credit score.
Credit utilization makes up 30% of your credit score, and it’s best to keep your utilization ratio below 30% to help improve your score. One strategy to help your credit score is to keep your credit utilization below 10% — a balance below $500 if you have a $5,000 credit limit.
4. Choose the right credit card
Credit cards have different rewards programs, and some provide double the rewards for specific spending categories. Consumers should look for cards that align with their spending, so they can get more points and cash from every purchase.
There are many different types of credit cards out there. Some are geared towards balance transfers, some offer no-annual fees, some are better for travel, and there are starter credit cards for those who may not have built up their credit history yet.
In short, you’ll want to compare your opportunities for credit cards to understand what you could qualify for and what type of credit card would suit you best. One of the best ways to do this is to use MoneyLion.
5. Don’t apply for too many credit cards at the same time
Each credit card application will likely trigger a hard credit inquiry. This credit check will decrease your credit score by a few points. It’s easy to recover from a single hard credit check, but if you apply for many credit cards, you will become subject to more hard credit checks.
Some consumers have sufficient scores to get reasonable credit cards, but too many applications suddenly take them out of the necessary credit score range. It’s a good idea to apply for a credit card you know you can get and use that opportunity to build your credit.
6. Consider using a co-signer
Getting a credit card with a co-signer can increase your chances of getting approved. The credit card issuer will assess the co-signer’s credit when deciding whether you should get approved for a credit card.
While this is a good arrangement for the applicant, the co-signer becomes legally responsible for any of the applicant’s debt. Most applicants reach out to a friend or family member with the co-signer request because the co-signer takes on a significant responsibility if the credit cardholder cannot repay the debt.
7. Discover ways to boost your income
Any lender wants to feel confident about your ability to make monthly payments. Demonstrating to banks that you make more money can increase your chances of getting approved for a credit card.
Picking up a side hustle or working extra hours at work can help build a good history of steady and growing deposits into your account.
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8. Review the terms and conditions of a credit card
Many credit card applicants think about getting approved. It’s exciting to have your own credit card, but you don’t want to find yourself in an unfair position. Before applying for a credit card, you should look at the interest rates, fees, balance transfer fees, and other details to determine whether the card is a good fit.
Applying for a card that isn’t a good fit can still result in a hard credit check that will make it more difficult to qualify for a credit card that is the right fit.
9. Check whether you’re pre-approved
The pre-approval process can help you determine whether you would qualify for a credit card before enduring a hard credit check. You can compare options and then apply to the card that is the right fit.
10. Understand the credit card application process
Each bank or financial institution will ask for several documents during the credit card application process. You should look at that list and assemble the necessary documents.
You’ll often see requests for the same group of documents, so there will be some overlap if you apply for multiple credit cards..
11. Have patience
Credit building is a long-term journey, and you may not have a high enough credit score to get the card you want. It may benefit you to improve your credit score before applying for a credit card.
You can also get a secured credit card when getting started if you have no other way to build your credit score. Some secured credit cards do not require hard credit checks because you have to provide a security deposit to obtain the card.
Remember, even if you are rejected now, building your credit score for a few months can put you in a better position down the road.
Getting The Right Credit Card For Your Finances
Getting approved for a credit card can give you more financial flexibility, but you should not rush the process. Shopping around and comparing terms and different credit cards can help you find a credit card that aligns with your spending needs.
FAQ
What do I need to provide to get approved for a credit card?
The credit card issuer will provide a list of necessary documents you will have to submit during the application process.
Are there other options if I don’t qualify for a credit card?
If you do not qualify for a credit card, you can consider a credit-builder loan or secured credit card to build your credit.
What credit score do I need to get approved for a credit card?
The necessary credit score depends on the card you apply for. A higher credit score gives you more choices and can help you get the card that is right for you.
