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Opening a new credit card can be a door to building credit and earning rewards on the purchases you already make. Before you apply for new credit, learn how to pick the best credit card for your goals and spending habits, understand a credit card's terms and fees, and select a credit card your score may qualify for. You can apply for a credit card by following these six steps.
1. Check Your Credit Score
Your credit score is typically the most impactful factor in your odds of credit card approval. In fact, 90% of top lenders use FICO® Scores☉ to evaluate your reliability or risk as a borrower. Your FICO® Score can impact whether you'll qualify for a specific credit card, and it can also factor into the credit limit and interest rate a lender offers you.
Check your FICO® Score for free through Experian to see how your score could influence your approval odds and terms. Scores range from 300 to 850. A higher credit score indicates lower risk and can make it easier to qualify for credit, while a low credit score can limit your borrowing options.
Here's a breakdown of the FICO® Score ranges and how they may impact your ability to qualify for credit:
|Understanding your FICO® Score|
|Less than 580||Poor|
|800 and above||Exceptional|
- Poor or fair credit can make getting approved for most credit cards challenging. If your score falls in this range, consider applying for a secured credit card to start building up a favorable credit history.
- Good credit can help you qualify for a broader range of credit cards. The higher you are in this range, the higher the likelihood you'll qualify for cards with favorable terms, such as a preferred credit card with competitive rewards or a card with low interest.
- Very good or exceptional credit can make it easier to qualify for most credit cards. Credit card companies are more likely to offer you lower interest rates and higher credit limits. It's unlikely that you'll be denied new credit based on your score in this range.
If you want a credit card that may be difficult to qualify for with your current credit score, it may be worth it to take some time to improve your score before applying for the card.
2. Decide How You Want to Use the Credit Card
Pinpointing what kind of credit card you need will simplify your search and help you get the most out of your credit card. For example, are you trying to earn travel rewards? Do you need to finance a big purchase over time? Or are you trying to repair or build up your credit?
Before you consider individual cards, know these common credit card types and their main benefits:
- Rewards credit cards: Ideal for earning cash back, points or miles on your spending.
- Introductory 0% APR cards: Ideal for avoiding interest charges if you want to transfer a balance or if you plan to use the card to finance a large purchase.
- Sign-up bonus cards: Ideal for earning extra points on a large, planned purchase. You'll need to spend a certain amount on the card within a few months of having it to qualify.
- Secured credit cards: Ideal for building a credit history or raising a low credit score. With a secured credit card, you provide a deposit to the lender that is typically equal to your credit limit. Because this reduces risk for the lender, secured cards are often easier to qualify for than traditional, unsecured cards.
- Student credit cards: Ideal for building credit and earning points while you're in college.
3. Shop Around for Credit Cards
It's always smart to compare credit card options to make sure you're picking a card with benefits and terms that are best for you.
Consider a credit card matchmaker to eliminate some guesswork. Experian CreditMatch™ uses your FICO® Score to curate a list of cards that you may be approved for. You can also narrow the list by specifying what type of credit card you're looking for, such as a rewards credit card or secured card.
4. Review the Card Terms
Before you apply for a credit card, understand the credit card terms. That way, you'll know how to use your card—and what you'll need to avoid—to ensure you get the most out of your card and avoid being hit with fees.
Here are some standard credit card terms you should know:
- Annual fee: A yearly fee for owning the card. Not all cards have an annual fee, and some lenders waive the first year's fee.
- Annual Percentage Rate (APR): How much interest you'll pay per year if you carry a balance.
- Balance transfer fee: How much it will cost you to transfer another credit card balance to the card, usually charged as a percentage of the transferred balance.
- Cash advance: The card's cash advance limit, APR and fees tell you how costly it is to use the card for this purpose.
- Foreign transaction fee: A charge on transactions made in countries outside of the U.S. Some credit cards may not have a foreign transaction fee, while others charge within a typical range of 1% to 3%.
- Minimum payment: The minimum you'll be responsible for paying on your statement balance each month, calculated as a percentage of your total balance including fees, or as a smaller percentage of your statement balance with any interest and fees you owe added to the payment.
- Penalty APR: A higher interest rate that could kick in if you make a late credit card payment.
5. Submit an Application
Before you formally apply, it's a good idea to get prequalified for a credit card. Prequalification uses a soft credit pull to check the odds that you'll qualify for a card without impacting your credit score. Note that it isn't a guarantee of approval.
When you're ready to apply, fill out the credit card application on the card issuer's site. You'll be asked for information such as your name, address, Social Security number, income and monthly housing payment.
After you submit your application, wait for a decision. Sometimes, approval takes seconds or minutes. Other times, you may be asked to wait for a decision to arrive in the mail. If your application is ultimately declined, the card issuer is required to provide a reason.
6. Get Your Credit Card
Once approved, you'll find on-screen information from your lender about what to expect next. Your lender will tell you when you can expect your new credit card to arrive in the mail, usually within 10 business days.
Some lenders provide you with a temporary virtual credit card number you can use for online purchases while you wait for your regular credit card to arrive.
The Bottom Line
There are a lot of credit cards to choose from, so it can take time to sort through the many options and find the right one for you. You can simplify your research and streamline your credit card application by using Experian CreditMatch to narrow your search to cards your FICO® Score makes you likely to get approved for and to personalize your results to show you credit cards that fit the bill.