Editorial Policy

6 critical steps to apply for a card

Allie Johnson

December 11, 2014

Want a shiny new credit card for your wallet? It can be tempting to start filling out card applications, but it's wiser to think through the application process first.

In fact, you should figure out why you need a new card, check your credit and learn the application dos and don'ts before you hit the “apply” button.

Here are six smart steps to take when applying for a new credit card:

1. Look at why you want a card. Is it to build credit? To finance a big purchase? To rack up rewards? Or is it just because you saw a sweet offer? “The first question is: Do you really need a card?” says Rob Berger, founder of the personal finance blog Dough Roller. If you do have a good reason for getting a card, though, clarifying your purpose will help you decide which type of card to get, he says.

2. Check your credit score and credit reports. You will need at least one of your FICO scores from MyFICO.com to see how you rank, says Beverly Harzog, credit card expert and author of “Confessions of a Credit Junkie: Everything You Need to Know to Avoid the Mistakes I Made.” Cards often are categorized by your credit rating as being excellent, good, fair or poor. Each of the major credit bureaus — Equifax, Experian and TransUnion — produce a FICO score and they run about $20 each. .

Also, check your credit reports for free at AnnualCreditReport.com. If there are legitimate errors that may be affecting your score, such as late or missed payments that you know you made on time, dispute them. The credit bureau's decision is not supposed to take longer than 30 days.

3. Figure out if you're likely to qualify. Certain cards require a certain credit profile, Harzog says. For example, if your score is 750 or higher, you should be able to get a card geared toward consumers with excellent credit. And with credit loosening up now, even a consumer with a score of 720 might qualify, though they'd get a higher APR than someone with a better score, Harzog says. If you have a score between 700 and 749, you'll likely qualify for a card that requires good credit.  When your score dips below 700, that limits your options, she says.

4. If your credit is iffy, see if you prequalify. If you've had credit problems in the past and your score is less than stellar, check with your preferred issuer to see if you prequalify, and for which cards, Berger recommends. For example, issuers such as Capital One, Chase and Discover offer that option to consumers. In about a minute, you can get an idea of whether you would qualify for a particular card, and checking won't hurt your credit score, he says. “You can save yourself the frustration of going from one card issuer to the next,” he says.

“The first question is: Do you really need a card?”
–Rob Berger, Dough Roller

5. Apply online or by phone. Filling out an application online is fine if your credit is excellent, Harzog says. But applying over the phone might be better if your credit is on the low end of the range for the card you want. If you call, you can talk to a person, get a feel for your chances of being approved and explain any issue with your credit, such as a late payment. “Maybe it was just a one-time thing,” she says. “Maybe you were in the hospital.” If you apply online and get turned down, call the issuer. “You can say, 'Can you take a look at this? I'd like to be reconsidered,'” Harzog says. If a customer service representative can't help, ask to talk to a supervisor.

6. Put in your application in plenty of time. If you want to use the card for a certain reason — for example, you're making a big purchase and want the rewards — apply in time to get the card in your hand. For major credit cards, it can take up to two weeks, or even a little longer, from the time you apply to the day you get the card, Harzog says. And for some secured cards, it can take as long as three or four weeks, she says.

But watch out: There are also a few things you shouldn't do when applying for a card. For example:

Don't apply right before applying for a loan. If you plan to apply for a mortgage, a home refinance or another type of loan in the next year or two, don't apply for a new credit card, says Tracy Becker, a credit expert and the founder and president of North Shore Advisory, a credit restoration and education company. “Every time you apply, it can ding your credit a little bit,” Harzog says, adding that each card application can lower your FICO score up to five points.

Don't apply for several cards at once. Applying for multiple cards can cause several small credit dings that add up, Harzog says. It also can earn you increased scrutiny from a lender. “It can make you look like you're desperate for credit, and that can be a red flag to issuers,” she says.

Instead, apply for your first-choice card and wait for an answer, she says: “If you get turned down, you can always apply for another one.”