How to apply for a credit card in 5 simple steps

By Kate Gillan | Citizens 

Learning how to get a credit card can be pretty quick and easy — if you know what to expect. In many cases you’ll know if you’ve been approved or declined instantly. But actually knowing how to apply for a credit card might seem a little overwhelming at first. You’ll want to familiarize yourself with terms such as credit score, interest rates, and rewards. You’ll also want to think about what kind of credit card works best for your lifestyle and budget.

If you’re wondering where to get started, you’re in good hands. Simply follow the steps below and arm yourself with as much credit card 101 knowledge as possible to choose what credit card fits your needs most.

Step 1: Before you apply for a credit card, learn your credit score

The process to apply for a credit card can start well before you click “submit” on your application. Taking the time to understand your credit profile will leave you with a better understanding of the offers you’re eligible for, and/or what you need to do to improve your credit score.

But how does one go about getting their credit score? You may be wondering, what do you need to apply for a credit card? To begin, you’ll need to review your credit history. Every 12 months you have the opportunity to check your credit from each of the three major credit bureaus — Experian, Equifax, and TransUnion. It can be helpful to go through these reports and make sure everything is accurate.

Occasionally, fraud does occur. Dispute anything that looks incorrect directly to safeguard your credit. Next, you will want to put together records of your income and employment history. Credit card issuers want to be sure you can make the monthly payments; they may ask how much you make and how long you’ve been employed. Gather this information and keep it on hand by filing away pay stubs or a digital record.

Know your credit score. Your credit score is determined by five factors:

Step 2: Find the card that's right for your lifestyle

There are a few different types of credit cards. Each has separate purposes, with different rules and stipulations. If you’re a student, a student card might be safest for your budget and lifestyle. Or, you may be someone who has a close affiliation with a certain hotel and want to accrue points with that particular establishment so you can stay with them all over the world at your leisure. You may also want to pay off debt with a balance transfer credit card. While the variety of credit cards available to you is vast, here are some of the main types of credit cards available today:

College student card

You may be wondering how old you have to be to get a credit card. While you can technically get a credit card at age 18, it’s not easy. In 2009, the Credit Card Accountability Responsibility and Disclosure Act prohibited issuers from giving cards to people under 21 unless they provided proof of income or a co-signer (someone willing to put their credit on the line to help the applicant get a card). The term is “authorized user,” meaning you’re authorized to be on someone else’s account. You’ll still have your own card, but the primary card member is responsible for your spending and debt. The positive side to this is you’ll be building a positive credit history. Some parents may want their children to begin establishing credit and help them attain one at 18. Otherwise, you must be 21 to sign a credit card contract.

Balance transfer card

A balance transfer credit card takes advantage of a lower interest rate. As the name implies, you simply move your debt from another card, but keep in mind you need to be in good credit standing to receive a balance transfer credit card.

Rewards card

Rewards credit cards are exactly how they sound — you get a small amount of money back for every purchase you make. People often use these types of cards to save for something larger, such as points towards a summer vacation. Rewards cards are best if you pay off balances in full every month to not affect the benefits. If you had a carryover interest rate, that debt would start to take a bite out of your rewards.

Rewards cards come in a few categories, so here’s our list of some of the most popular types:

• Cash back card:  Whenever you make a purchase, you get a percentage of the amount it costs put back in your account. Certain cards divide cash back offers into categories such as gasoline or online purchases, but most cards provide it on just about anything you buy.
• Airline or hotel cards: These cards give you points or miles towards a free flight or hotel you can work toward enjoying in the future. Sometimes certain airlines or hotels partner with your card company. Keep in mind there are often restrictions, also known as “blackout dates” on certain popular travel dates such as holidays, though not always.
• Store credit cards: If you find yourself shopping in the same department store or large food chain frequently, a store credit card might be right for you. These cards reward your loyalty with store-specific benefits, such as a percentage of savings from every purchase.
• Travel cards: While they may sound like an airline or hotel card, these are general travel cards not specific to a certain airline or hotel. Instead, you simply get redeemable points toward future travel.

Low-interest card

Instead of rewards, low-interest credit cards have a lower interest rate, which makes it easier to carry a balance. These cards give you the time necessary to pay off a large purchase, often offering a low introductory APR.

Now that you have a solid picture of how credit cards work, you’ll need to decide which card is right for you. Consider your credit habits before choosing the credit card you should get. Do you carry a balance from month to month? Consider a card with low interest. Do you consistently make full payments? Look at rewards cards that can help you optimize your cash flow.

Remember to read through the terms and conditions so you can compare your options. Fees and interest rates are important deciding factors when choosing a credit card.  For example, a card may have no annual fee, but its high interest rate may not offset potential savings.

Step 3: Complete the application

Filling out a credit card application is likely the easiest part of the process. You typically have the option of applying over the phone, in person, or online. Applying online is the quickest method, since a lending decision is often made instantly.

To apply, you will need the following information:

• Your full name
• Social Security number
• Date of birth (must be at least 18)
• Current address
• Annual income
• Current employer and length of employment

Pro tip: Keep your information safe! Never fill out an application on public Wi-Fi or through an unsecure connection. Fraud does occur and you want to ensure your private personal information remains just that, private.

Step 4: Lending decision

Once your application is submitted, one of three things will happen. It will be approved, submitted for further review, or denied.

If your application is approved, congratulations — you should expect to receive your new card in the mail anywhere from a few days to several weeks. Use it wisely.

If further review is requested, the credit card company wants to take a little more time deciding. At that point they should provide you with a time frame in which you can expect a decision.

If your application is denied, expect to receive an “adverse action notice” explaining the reason. Although you might be frustrated with this news, always read through the notice to understand what you need to improve or if there was a mistake or typo on your application. All is not lost if you are denied. You can improve your credit by applying for a secured card, which requires a security deposit. You can also ask a parent, spouse or partner about becoming an authorized user and “piggybacking” on their credit to help build-up your own.

Pro tip: Every credit card application creates a hard inquiry on your credit report that can negatively affect your score. Therefore, if you were declined this time, a good rule of thumb is to wait at least six months before applying again.

Step 5: Receive your card and make purchases

You’ll want to know your monthly total you can spend on your card. This is also known as a line of credit. You only want to make purchases up to this amount, known as your credit limit. Once you hit your limit, you’ll need to pay down your debt before making more purchases.

Now that you’ve followed along with our credit card guide, it’s time to talk about what to expect once you start using your card. Be sure to keep your monthly statements in a safe place. Look over your credit card summary and note where you made purchases. Check your monthly minimum payment obligation and make note of your bill's due date.

Are you ready to consider a credit card?

Now that you’re up to date with the various types of cards and ways to decide which card is right for you, you’re ready to begin!  When it comes to understanding and applying for credit, knowledge really is power. Before you apply for a credit card, do your homework first to avoid a potential rejection. Everyone’s financial situation is different; therefore the cards your parents or friends use may not be the best match. Make sure you’re making the money moves right for your personal situation.