Last Updated on August 9, 2022
Filling a credit card application form is rather simple. You need to enter your personal details, and you’re done. However, successfully meeting the credit card company’s financial requirements to avail of the best offers is tricky.
A credit card is much like a sharp knife: it can serve as a useful tool or a dangerous weapon. When used wisely, a credit card makes it convenient to manage your cash flow and monitor your expenses.
Here are some important steps you should know about before submitting a credit card application:
Know Your Credit Score
Your credit score is an important financial number that credit card issuers will check to estimate your creditworthiness. A score requirement is associated with a majority of credit card applications.
If you are a beginner without a score, you will have to search for a credit card that does not require a credit history. These cards will help develop your credit history to allow you to apply for better cards later on.
The good to excellent range for a credit score is usually 670-850. Once you reach this range, you will have more options available, such as reward cards. You can access your credit score by getting your credit score report from any of the main credit reporting bureaus in the country.
Moreover, it is vital to keep checking your credit report, as this forms the foundation of your credit score. Make sure that you analyze your report thoroughly for any mistakes. Once found, you can dispute the credit report error.
Assess Your Needs
Once you have examined your credit score and understood which cards you qualify for, it is time to think about your needs. They can include earning travel rewards, building credit, or earning cash back. Several cards are designed for each of these needs.
Each card also contains different terms and conditions, such as interest rates and fees. Make sure you check whether the card has an annual fee and assess whether the annual fee will be worth the while.
Furthermore, determine whether you will be carrying a certain balance on your card or plan to pay off your purchases completely. If you intend to carry a balance, the interest rate will considerably influence your monthly payments. In this case, you will want a credit card with a low interest rate or that with a card with a 0 percent annual percentage rate (APR) for a certain period.
Conduct your research thoroughly to determine which card would suit you best. If you are unable to decide, you can ask your friends about the cards they have. Alternatively, you can recommend them a card that you like, as both parties tend to receive a reward when you convince someone else to sign up with you.
Fill Out the Application
Once you have chosen the credit card you want, start filling out the application. You will be required to enter a mixture of personal and financial data, such as your name, address, annual income, monthly expenses, Social Security number, and the balance in your existing bank accounts.
Credit card applications can be filled either through direct mail or online. A major benefit of online applications is that you may receive a response within only a few minutes. It is now even possible to complete credit card applications through your phone.
Credit card issuers use the information regarding your income to determine the amount of disposable income you possess. This eventually helps determine your credit limit.
Your address is also an important aspect of a credit card application. Firstly, an address can help verify your identity. Moreover, a bank will check the time period you have lived at the same address for risk assessment purposes. According to statistics, people residing in a single place are more likely to have stable jobs and honor their debts. On the other hand, moving often may point towards issues with holding on to jobs.
Check for Pre-Approval
Before applying for a credit card, find out if you can be pre-approved. Remember that every credit card application involves a strict credit inquiry that lowers your credit score for the time being. Checking for pre-approval is an effective way to determine whether you are eligible for a credit card before actually applying.
Pre-approval or pre-qualification pertains to a soft entry into your credit report to determine if you meet the issuer’s conditions for opening an account. A soft inquiry does not influence your credit score in any way. However, note that being pre-approved does not confirm that you will receive the card you are applying for.
Understand Terms and Conditions
Once you are approved, make sure you learn about all credit card terms and conditions. Keep in the mind the credit card limit you were approved for, your billing due date, and the APR if you intend to carry a balance.
All credit card agreements are legally bound to show a rates and fees table known as a Schumer box. This clearly points out all fees linked to the credit card. A Schumer box typically contains:
- Annual fee
- APRs on purchases, cash advances or balance transfers, and any variations in the rates
- Penalty APRs or fees in case of a late or missed payment
- Minimum amount charged every month in case you carry a balance
- Foreign transaction fees
- Balance transfer fees
- Method of calculation of finance charges
For a successful credit card application, you need to be at least 21 years old, or 18 with either permission from parents or a legitimate source of income. Moreover, you are required to have a social security number and a proper source of income.
After you have submitted your credit card application, it is time to wait for a decision. Issuers typically respond within 10-14 business days. As soon as you receive your card, you can activate it and start making purchases.
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