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It's simple to apply for a credit card account online. Getting approved, on the other hand, could be a different story—especially if you're new to credit or have had credit problems in the past. To get approved for a credit card, it helps to have a plan.
If you've never had a credit card before, it might be challenging to find a bank willing to issue your first account. When your credit history is damaged, qualifying for a new account can be even more difficult.
But that doesn't mean it's impossible. With a little preparation and research on the front end, you could improve your chances of getting an approval for a new credit card account instead of a frustrating denial.
Steps to Getting Approved for a Credit Card
It's no fun to apply for a credit card only to get denied. Here are a few tips to help set you up for success.
1. Check your credit score and report.
When you apply for a new credit card, one of the first things the lender will do is check your credit report and score from one of the three major credit reporting agencies (Experian, TransUnion and Equifax). So take a look at your credit on your own before you fill out any applications. You can get a free credit report from Experian once every 30 days.
Once you have your report and score in hand, make sure there are no errors or mistakes. You can also check to see which credit score range you fall into currently. That will help you with the next step.
2. Choose the right credit card.
After reviewing your credit, you'll be better prepared to know which credit card offers might be a good fit for you. If you have excellent credit, you likely won't be faced with many qualification problems. You can search for cards with attractive rewards, cash back offers or whichever features are most important to you. On the other hand, if you have no credit or poor credit, you'll want to search for cards that say they don't require good or excellent credit to qualify, such as secured or prepaid cards.
By knowing which cards you're more likely to qualify for ahead of time, you could be less likely receive a denial. Additionally, this knowledge can help you to avoid repeat credit inquiries from lenders as you try to find a company that will approve your application. Multiple inquiries for credit cards could be bad for your scores and may potentially be seen as negative in lending decisions.
Remember, if your credit score isn't as strong as you'd like right now, that doesn't mean you'll be stuck in that scoring range forever. With time and good credit management habits, your credit can eventually recover. A well-managed credit card account can potentially be a step in the right direction.
3. Make sure you meet the criteria.
Prior to filling out a credit card application, make sure you can check off all of the following criteria:
- You're over age 18.
- You have sufficient income or assets to satisfy the card issuer. (Lying about your income is considered fraud and could come with serious consequences.)
- You have enough money to cover your deposit on a secured card, if applicable.
4. Apply for the credit card.
If you're still nervous about whether you'll be able to qualify, consider a bank that allows you to see if you're prequalified first. A prequalification isn't the same as an approval, but it's a good sign that you may get approved.
Applying for a Retail Credit Card
When you're new to credit or you're trying to overcome past credit problems, retail credit cards might be an option to consider. Retail cards often offer less stringent approval criteria than other credit card offers.
Keep in mind, however, that retail credit cards have limitations on where they can be used. Additionally, they are often issued with lower credit limits, which can make it easier to over-utilize your account, and they may charge higher interest than other cards. Still, if you use your retail card wisely, it can be a good stepping stone when you're trying to get your first credit card to help build better credit.
What if My Application Gets Denied?
Just because your application is denied, all hope is not lost. It just might take some more work and time on your end before you're approved for another credit card in the future.
If you're denied credit and your Experian credit report was used as part of the application, you can request free access to your Experian credit report. However, you won't know which credit report the lender used as part of your application until they mail you a declination notice.
If you're turned down due to credit problems, you can take steps to improve your credit situation. Changes to your credit won't happen overnight; however, taking the following actions will help you improve your credit:
- Pay your bills on time. Payment history is the most important factor in your credit scores, so be sure to make your payments on time every month to establish a positive credit history.
- Keep your balances low on revolving accounts. A high credit utilization—using more than 30% of your available revolving credit—can hurt your credit. For the best scores, don't use more than 10% of your available revolving credit.
- Correct mistakes on your credit reports. If you see any mistakes on your credit reports, be sure to correct them as soon as possible.
If you can't qualify for an unsecured credit card right now, check out secured credit cards. A secured card is typically easier to qualify for and can still give you credit-building potential, depending on the card, when it's managed correctly.
The condition of your credit can have a big influence on your financial life, and not only when you want to get approved for a credit card. It's important to keep an eye on your credit reports to make sure that your information remains error-free, and to do all you can to build your credit to improve your future financial opportunities.