Getting a Credit Card: It is pertinent that when applying for a credit card you know the steps involve. Please know that when applying, it can feel scary as taking a final exam. When you are applying for your first credit card, you are essentially asking a card issuer to take a chance on you. As such you need to know the necessary steps involve.
Even if you are not ready to apply for a credit card right now, you can take proactive measures. Measures that may help you get it approved in the future.
What is a Credit Card?
A credit card is defined as a thin rectangular slab of plastic issued by a financial company. This allows cardholders to borrow funds with which to pay for goods and services.
Credit cards impose the condition that cardholders pay back the borrowed money, plus interest, as well as any additional agreed-upon charges.
Some Steps Involve in Getting a Credit Card
1. Always Keep a Check on your Credit Score
Knowing your credit score and what is on your credit report can help determine what products to apply for. If you have fair credit you may not want to apply for a card that clearly states that only applicants with excellent credit will be approved.
Take some time to review your report. As the Consumer Financial Protection Bureau notes, your credit report may contain errors.
The errors may be old collection accounts that should have already dropped off your report. Such could prevent your application from being approved.
2. Determine what Type of Card you need
Determining the type of card you need is essential. If you are a first-time applicant, it is good to shoot for a card with low or no annual fees and a low interest rate.
In most cases, one card should be enough to start with. This is because it limits the risk of you getting confused by multiple payment due dates.
3. Choose where to Apply
Another important step involve in getting a credit card is applying for a credit card from a financial institution where you have an account. This is a good idea since you have an established history there.
4. Check to see if you Pre-Qualified
Always check to know if you pre-qualify. Some big banks, such as Chase and Capital One, allow you to see if you are pre-qualified for a credit card.
However, this requires some work on your side. In other words, you typically need to fill out a short form and submit personal information. This will include your Social Security number.
This triggers a soft inquiry, which, much like checking your credit on Credit Karma, will not affect your credit score.
5. Prepare for a knock to your Credit
When you apply for a new credit card, it usually triggers what is known as a hard inquiry on your credit report.
Hard inquiries generally occur when a financial institution, such as a lender or credit card issuer, checks your credit report when making a lending decision.
A hard inquiry can lower your credit score by a few points. Also, it may stay on your credit report for as long as two years. The good news is that a hard inquiry might not affect your score as much as you may think.
6. Get a job
While your income does not play a role in determining your credit score, it does affect your ability to get approved for a credit card.
Credit card issuers like to make sure of two things before giving out accounts. One is that you are a reasonably trustworthy borrower. Two; that you have the means to pay your bills.
In fact, a big part of the credit card approval process involves examining your debt-to-income ratio. This is taken by dividing your total recurring debts by your gross income.
7. Find the Right Credit Card
Putting yourself in a good position to get approved for a credit card is only half the battle. Once that is out of the way, you will need to find the ideal card to apply for.
Assuming you are eligible for some of the best offers out there, you will need to decide what rewards and features are most important to you. If you are big on exploring the globe, you might think about getting a travel card.
This travel card is typically means you will not face foreign transaction fees for purchases made abroad.
On the other hand, if your goal is to get your hands on the maximum amount of cash back, you may want to look at some of the cards on this list.
What to do if your Credit Card Application is Denied
Do not be Despair
When you are denied a credit card do not to be despair. Many people have been rejected for credit cards, and many have later been accepted for other cards.
Weigh your Options
If your application is denied it is important to weigh your options.
You might also want to try applying for a different traditional (unsecured) card. However, be very selective about additional applications as each one may hurt your credit.
You might also consider applying for a secured credit card, which requires a cash deposit that becomes collateral for your account.
In a Nutshell
Getting a credit card may appear to be a little difficult. However, if you the key steps involved in the process, you will save yourself such stress. The above tips and steps discussed, if followed can help you in getting your credit cards at ease.