Applying for a credit card and waiting for approval or rejection can be as scary as taking a final exam or speaking in public.
Knowing how to apply for a credit card is one thing, but knowing what issuers are looking for before applying for a new card is really the first step to success.
“When you apply for your first credit card, you’re essentially asking the card issuer to take a chance on you,” says credit educator John Ulzheimer of The Ulzheimer Group.
Ulzheimer’s advice? Be realistic with your expectations.
“You are very unlikely to get a high credit limit, and you may not even get a modest credit limit,” says Ulzheimer – and that’s okay. Establishing credit is a process and you have to start somewhere.
Just remember: depending on your credit (what lenders may call your “ credit worthiness ”), you may not be ready to apply for a credit card right now, but you can take proactive steps that can help you get approval in the future. If you think you’re ready, we explain how to apply for a credit card in eight steps. It all starts with checking your credit.
1. Check your credit scores
Knowing your credit scores and what is on your credit reports can help you determine which products to order. If you have reasonable credit , for example, you may not want to apply for a card that clearly states that only applicants with excellent credit will be approved.
Take the time to review your reports. As indicated by the Consumer Financial Protection Bureau , your credit reports may contain errors, such as old collection accounts that should have already disappeared from your reports, that could prevent your application from being approved.
How can I dispute errors on my credit report?
Credit reporting errors are not uncommon and how you dispute an error will depend on the type of error you have. Some errors may be related to the account (a late payment that is more than seven years old, for example) or incorrect personal information (an incorrect name is indicated).
2. Determine what type of card you need
If you are applying for a card for the first time, it is probably a good idea to go for a card with no annual fees or low annual fees and a low interest rate. You can make comparisons on Credit Karma before applying to get an idea of what you are looking for. In most cases, one card should be sufficient to get you started as it limits the risk of being confused with multiple payment due dates.
If you have no credit history, or have had trouble getting approved for an unsecured credit card in the past, you may still qualify for a secured credit card , which requires a security deposit and is commonly used for generate credit.
Another recommendation: apply for a retail store credit card . Julie Marie McDonough, author of “How to Make Your Credit Score Soar,” describes retail store cards as the “training wheels” of credit cards, as issuers tend to be more flexible about who qualifies for a card. .
But these cards have some drawbacks, including high interest rates and surcharges, so it’s important to use them responsibly.
3. Choose where to apply
Do you already have a checking or savings account at a bank or credit union? McDonough says that applying for a credit card from a financial institution where you have an account can be a good idea, since you have an established track record there.
Andrew Fiebert, co-founder of the personal finance resource Listen Money Matters, agrees. “An existing banking relationship could improve your chances of getting a credit card application approved,” he says, “especially if you’ve managed your account responsibly, such as without having overdrafts.”
4. Prepare for a hit to your credit
When you apply for a new credit card, you generally generate what is known as a hard credit check on your credit reports. Tough credit checks generally occur when a financial institution, such as a lender or credit card issuer, checks your credit reports when making a loan decision.
A hard credit check can lower your credit scores by a few points and it can stay on your credit reports for up to two years. The good news is that a tough credit check might not affect your scores as much as you think, and the impact usually lessens or disappears as time goes on.
5. Use best credit card practices
If you get a card approved, congratulations! A credit card can be a really useful tool to help you build credit over time. But now that you have it, remember that it is a tool that requires maintenance and attention on your part. Learn about credit card best practices, such as making full and on-time payments and keeping your credit usage low (preferably below 30% of your total limits).