A credit card is one of the easiest and most accessible ways to build credit, and it’s really no wonder that Americans are such big fans of them. According to credit card research from The Ascent, 80% of us have at least one credit card — and a whopping 13% of us have at least four.
I’m part of that 13% (and I know some of my colleagues here at The Ascent are, too), but this doesn’t mean I apply for every credit card that catches my eye, or that applying for a new card is something I take lightly. Adding a new credit card account can impact your personal finances significantly, after all. If it’s time to add a new card to your wallet, here’s what you can do to ensure you get approval from a credit card issuer.
In personal finance, as in all things, knowledge is power. So before you apply for a new credit card, check your credit score. You might have access to credit score monitoring through a current credit card issuer or your bank. It’s a good idea to stay on top of your credit score (and credit report; more on that below) anyway. But by knowing your score ahead of time, you can ensure you’re applying for a card geared toward your financial situation.
For example, a lot of the best travel rewards cards are designed for consumers with good to excellent credit scores (for FICO® Scores, this is 670–850). Don’t waste your time applying for a card geared toward a much higher score than yours, and conversely, if you have a strong credit score, you’ll find much better perks with a card that’s made for you.
If your credit score comes back lower than you were expecting, or if it’s been a while since you checked your credit report anyway, it’s a good idea to do so. A low credit score can likely be explained by information you’ll find on your credit report.
And you should check the accuracy of what’s there — credit report errors are common, and you can have them removed by the credit bureau, boosting your score. You can get your credit report for free every week for the rest of the year.
If you have existing credit card accounts, now is a good time to sign into them and see what’s up. If you are carrying balances, do they represent more than 30% of the credit limit you’ve been given? It’s best to keep your credit utilization ratio below 30% to avoid credit score damage. If you have higher balances than that, it could impact your ability to get approved for new credit.
Also, make sure you don’t owe any money to current creditors — late payments or delinquencies will do you no favors when applying for a new card.
Some credit companies have prequalification tools, which can be a super handy way to see if it’s worth putting in a full application for a card you want.
In most cases, you’ll just need to provide your name, address, and the last four digits of your Social Security number. In exchange, the card issuer’s website will show you a selection of cards that could be a fit for you and your finances. This could even be a good way to learn about credit cards you hadn’t considered before.
Finally, if you want the best chance of getting approved for a credit card, you should spread out your applications. Every time you apply for a card, the issuer will use a hard credit check to delve into your financial history, and this can result in the loss of a few credit score points. This is no big deal if it happens occasionally, but if you’re applying for new cards frequently, it can add up.
Plus, a lot of credit card applications in a short period could signal that you’re having trouble managing your money. That could lead credit card issuers to wonder if you’ll be able to pay them back for what you charge on a credit card.
Getting a new credit card can be super exciting — the rewards, the cash back, the welcome bonus! It pays to take these steps along the way if you want the best chance at getting approved.
If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
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