Applying for a credit card can be as simple as entering your information into an online form and clicking "submit." But getting approved for a credit card? For some, it requires a little know-how and planning before applying.
» MORE: Ready to apply now? See NerdWallet's best credit cards
» MORE: Bad credit? Get a credit card that’s right for you. See NerdWallet’s best credit cards for bad credit
1. Learn about credit scores
Credit scores — you have many — are one of the most important factors in a credit card issuer's decision to approve your application. Banks differ on how they grant approvals, but scores are typically classified by lenders like this:
300 – 629 | Bad credit |
630 – 689 | Average credit |
690 – 719 | Good credit |
720 and up | Excellent credit |
» MORE: Find out your credit score
Most rewards credit cards require good or excellent credit. So if you've struggled to maintain a good credit history, you might want to delay applying until your credit improves. Or, instead of rewards cards, you could consider secured cards or cards designed for people with bad credit.
» MORE: Sign in or register for personalized credit tips
2. Access your credit scores
The most prominent scoring models are FICO score and VantageScore.
You can pay to get your FICO score from MyFICO.com, but you can get them elsewhere for free. For example, if you already have a credit card account, you may already have access to free FICO scores on your monthly statement or online account.
Some personal finance websites, including NerdWallet, offer a free credit score from VantageScore. VantageScores and FICO scores track similarly because both weigh much the same factors and use the same data from the credit bureaus.
See NerdWallet's free credit score and free credit report information, updated weekly, for monitoring throughout the year.
» MORE: What is a good credit score
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3. Improve your credit
Your credit scores will rise if you:
Make payments on time.
Keep balances low on existing credit cards.
Avoid new debt.
A full 30% of your credit score is determined by how much you owe. High credit card balances can be especially damaging. Your credit utilization ratio — your balance divided by your credit limit — ideally would be below 30% on each credit card. For example, if you have a credit limit of $10,000, it's recommended to keep the balance below $3,000.
Lower your credit utilization by creating a plan to pay down an existing balance as quickly as possible. And consider paying off purchases more than once a month to keep your balance lower throughout the month.
» MORE: 8 ways to build credit fast
4. Prepare for questions you’ll be asked
When you apply, you’ll be asked similar questions no matter which company is issuing the card. It helps the issuer to decide whether to approve you for the card. In most cases, you’ll have to provide your Social Security number, for example.
And because credit scores don’t reflect your income, they’ll ask about that.
Card issuers use income to calculate your debt-to-income ratio, which helps determine your ability to make payments. Improve your ratio by either increasing income or decreasing debt.
If you earn money outside your full-time job, include it on your application. As long as you’re 21 or older, you can include your household income, including income from your spouse or partner, on your credit card application.
» MORE: How to report income on your credit card application
Resist the temptation to overstate your income. If an issuer finds that you knowingly provided false information on your application, you could be charged and convicted of credit card fraud.
Being unemployed doesn’t automatically disqualify you from getting a credit card.
5. Apply strategically
If you have bad credit, you may not get approved for a card with a large sign-up bonus and lucrative rewards. Each credit card application can temporarily ding your credit scores, so consider using an online tool to pre-qualify.
You can also call the card issuer and ask about a specific card's requirements.
No luck pre-qualifying? Consider these good cards for people with bad credit, which can help you get closer to qualifying for a rewards card over time. Use the card responsibly to help mend your credit.
You may have an easier time getting approved for a secured credit card, which uses a cash deposit you make upon approval to "secure" your line of credit. Some of the best secured cards offer cash rewards, flexible deposit amounts, and the chance to upgrade to an unsecured card (and get your deposit back).
» MORE: How to apply for a credit card online
6. Don't give up
If you think you've done everything right and your application is still denied, you can call the issuer and ask for reconsideration.
Have a plan before you call. You have the right to ask the issuer why you were denied, and you can also check your free credit report at AnnualCreditReport.com to see if there are any blemishes on your history. Formulate a convincing argument for why you want the card and why you are fiscally responsible. Be polite. Customer service agents are more likely to respond positively if you have a pleasant demeanor.
Still no luck? Waiting about six months between credit card applications can increase your chances of getting approved.
» MORE: I have good credit. Why don’t I qualify for that card?
The bottom line
Being denied for a credit card can hurt — both psychologically and in terms of the effect on your credit scores.
That's why it's essential to take stock of your credit situation before you apply for your next card and to choose the best card.
» MORE: Sign up to see your credit score and report
Also, give accurate information during the application process and be prepared to make a case for yourself in the event you aren't approved immediately.
I am an experienced financial advisor with a deep understanding of credit cards and the intricacies involved in the application process. Over the years, I've assisted numerous individuals in navigating the complexities of credit, helping them secure the best cards suited to their financial goals. My expertise is rooted in practical knowledge, staying abreast of the latest developments in the credit industry.
Now, let's delve into the key concepts highlighted in the article:
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Credit Scores:
- Credit scores play a pivotal role in the approval process. The article categorizes scores into different ranges: bad credit (300 – 629), average credit (630 – 689), good credit (690 – 719), and excellent credit (720 and up).
- Mention is made about the significance of credit scores in determining eligibility for rewards credit cards, emphasizing the need for good or excellent credit for such cards.
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Accessing Credit Scores:
- The article mentions two prominent scoring models: FICO score and VantageScore.
- It highlights that credit cardholders may already have access to free FICO scores through monthly statements or online accounts.
- Personal finance websites, including NerdWallet, offer free credit scores based on VantageScore.
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Improving Credit:
- Strategies to improve credit scores are outlined, such as making payments on time, keeping credit card balances low, and avoiding new debt.
- The importance of credit utilization ratio (balance divided by credit limit) is stressed, with a recommendation to keep it below 30%.
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Preparing for Application Questions:
- Anticipating the questions asked during the application process, including providing Social Security numbers and details about income.
- Emphasizing the role of income in calculating debt-to-income ratio, influencing the ability to make payments.
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Strategic Application:
- Advises individuals with bad credit to consider pre-qualifying to avoid temporary credit score dings.
- Suggests calling card issuers to inquire about specific card requirements.
- Recommends secured credit cards for those with bad credit, detailing their features and benefits.
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Persistence After Denial:
- Encourages individuals to call the issuer for reconsideration if their application is denied.
- Stresses the importance of having a plan and a convincing argument for reconsideration.
- Advises waiting about six months between credit card applications to increase approval chances.
In conclusion, the article provides comprehensive guidance on the credit card application process, from understanding credit scores to strategic application and persistence in the face of denials. Following these insights can significantly improve one's chances of securing a suitable credit card.
