No, your boss isn't contacted when applying for credit
By Erica Sandberg
July 21, 2015
If I never had a credit card before (I haven't), how do I apply for one? Sorry, I feel a little (a lot) lost. Like where do I go and what should I write? I know my income is part of it, so will they ask my boss about me? — Tara
Glad you asked, because there many ways to apply for a credit card:
- By mail. Many people get letters from credit issuers that are essentially invitations to apply. There's no guarantee you'll be accepted, but it's usually an indication that you've been prescreened, so the chance you'll be eligible for their product is higher than if it were a random application.
- At a retailer. Ever go to a store and are asked at the register if you'd like to save 15 percent off the day's purchases by opening a credit card account? Sure you have! The majority of retailers will connect you to their credit card division and you can try for it right there at the register. Will you qualify, though? Hard to say, though some store cards are easier to get than the typical unsecured card that you can use anywhere.
- At a financial institution. Just about all major banks and credit unions offer credit cards as part of their product line. If you have a checking and savings account with one of these institutions and have treated the accounts responsibly, some (especially credit unions) will be more forgiving to those with thin credit files.
- On the credit card company's website. Surely you've heard of many of the major credit card issuers, as most advertise heavily. You can check them all out, one by one, on this site or on the issuer's individual websites. As you'll see, each offers a variety of card types — some are for credit beginners, others are for experienced chargers. If one sounds interesting, you can apply online.
- Over the phone. Follow the same directions as the online option, but give the company a call instead. The representative will either walk you through the application process by asking questions, or they'll just direct you back to the website so you can apply electronically.
- Online, here. We hunt and gather credit card products from the wide world of sources, so you can see what's available all in one place. The categories to check are type of card, credit rating, and issuer. Because you're so new, the best place to start is “limited or no credit history.” Then, assuming you identify a card that appeals, you can click “apply now” to be directed to the issuer's website.
As far as the information you'll need to provide to the credit issuer, it will be the same whichever way you apply: your name, address, Social Security number, date of birth, what your rent or mortgage payment is and annual household income.
Which takes us to that job of yours. Not to worry, the issuer won't reach out to your boss or the human resources department and ask for verification of income. However, you must be honest. A line of credit — which is the amount you can borrow — will be based on what the issuers thinks you can afford to repay. If you claim to earn $100,000 when you really only make $10,000, they could give you more borrowing power than you can handle. That puts them at risk. Lying about your income is illegal.
Also important is to apply prudently. Only go for the account that you are most likely to qualify for (which might be a basic card with a very low credit limit or one that's secured by a cash deposit), then wait to see if you get the nod. The turnaround time for everything but the mail-in option is fairly immediate. This is because the issuer has the necessary data to assess. When you apply, you give them access to your credit file, adding an inquiry to your credit reports. Too many inquiries can drive a credit score down.
Once you get a credit card, simply spend with it and pay on time, taking care to keep the balance to zero. All your activity with the account will be recorded on your credit reports. When it indicates that you've been a responsible cardholder, offers will come to you. And at that stage you can be considerably more picky.
Got a question for Erica? Send her an email.