A credit card can be a good tool to build credit, earn rewards, and even pay down existing debt.. And some of the best credit cards come with annual credits, travel perks, and other benefits that can help you save money.
But knowing how to get a credit card — and then qualifying for the card you want — can be tough. For first-time credit card consumers, qualifying for a card can be extra tricky.
Even so, the process of applying for a credit card is easier when you have all of the right information.
Here’s everything you need to know before applying for a credit card, and how to choose a credit card that’s best for you.
Basic Requirements to Get a Credit Card
To qualify for any credit card, you’ll need to start with some basic information and documentation the issuer will review in considering your application:
- Social Security Number
- Proof of Identity (like a Driver’s License or birth certificate)
- Proof of income — and don’t forget to include all of your income streams
From there, here are the exact steps you’ll take:
1. Check Your Credit
Your credit score and credit report are key metrics used by credit lenders to determine your creditworthiness. Your credit report is a record of your financial history, and your credit score is a numerical score based on that report. You can access your credit report from each of the three major credit bureaus — Experian, Equifax, and TransUnion.
These three credit bureaus compile and report your credit activity into a report that is often used when applying for a credit card, auto loan, and more. Before applying for a credit card, take a look at your credit report from each of the credit bureaus to see an overview of your credit history and fix any mistakes. You can get a free credit report from each credit bureau once per year.
Your credit score can also help you determine which credit cards you may qualify for. Your credit score typically falls into a range between 300 and 850. FICO Score is the most common scoring system, with the following credit ranges:
|Credit Score||Credit Rating|
Your credit score is based on several factors — including your payment history, balances owed, age of credit history, credit mix, and recent activity. A “good credit” rating generally requires a score of at least 670, but each lender has its own approval criteria. The better your credit score, the more likely you are to get approved for new cards and the best interest rates. You can typically access your free credit score through your bank or credit card online account.
How to Get a Credit Card with Bad or Fair Credit?
If you have a poor credit score, your chances of qualifying for the most competitive rewards credit cards will be low. However, there are many credit-building options for people with less-than-perfect credit. A secured credit card, for example, is one of the best ways to build or rebuild your credit.
Secured credit cards work just like normal credit cards, but require a refundable deposit that acts as your line of credit. The deposit also serves as a form of collateral for the lender — making these cards easier to qualify for. Secured cards don’t usually carry many rewards or perks, but as you practice good habits and develop a positive payment history, the card issuer may evaluate your account to determine if you’re eligible to get your deposit refunded or to upgrade to an unsecured credit card with more benefits.
Can I Get a Credit Card with No Credit History?
If you’re starting to build credit for the first time, a secured card can still be a good option for kickstarting your credit. Or you may also consider credit cards with alternative approvals. When you apply, the issuer not only looks at your credit score and history, but you can also submit your banking history, bills, source of income, spending habits, and other personal financial information to help demonstrate your creditworthiness. Like other cards for building credit, credit cards with alternative approvals often focus on credit-building incentives to improve your credit score, instead of rewards.
How to Improve Your Credit Score
Some cards will require you to have better credit than others, and, if you have poor or little credit history, you might not be able to get a card right now, or you might not qualify for the best interest rate. But don’t worry, there are sure-fire ways to build your credit, even if you have bad or no credit history. Here are some options to consider for first-timers:
Student credit cards
Student Credit cards are designed for college students with little-to-no credit history and lower-income than a working adult. They typically have low credit limits and higher interest, but can be a good starting point to building positive credit. You have a better chance of getting approved for a student credit card from a major credit card issuer with no credit history compared to non-student cards.
Retail credit cards
Retail, or store, credit cards are designed to offer frequent shoppers rewards or discounts for spending money at a specific store. Unlike student credit cards, a retail credit card can only be used at the store it’s opened under. Retail credit cards tend to have more relaxed approval standards than other traditional credit cards — because stores benefit from increased consumer spending. If you do a lot of spending in one place, a retail credit card can be a good way to start building your credit with purchases you were already going to make. You could earn discounts or rewards, as well.
Get a co-signer or become an authorized user
Getting a co-signer on a credit card can help you get approved for credit cards that might otherwise be difficult. Becoming a co-signer means someone, generally with established and good credit, takes on the legal responsibility of your debt if you don’t pay. Because of this promise, lenders will often approve co-signed accounts even if they would not have approved the individual. An authorized user works differently. An authorized user is someone who holds a card to an existing line of credit. The authorized user is not legally responsible for any repayment on the account and defers to the primary account holder. Becoming an authorized user is an excellent way to build your credit.
2. Decide Why You Need a Credit Card
Credit cards can have different uses that serve your different financial goals. Some reward frequent travelers who charge their airline, rental car, and hotel purchases to their cards. Others help people save on everyday purchases at grocery stores or gas stations. Still others are designed to help pay down debt or finance a large purchase over time. With this in mind, here are some of the more common credit card types available:
Cash Back Credit Cards
Cash back credit cards offer a straightforward rewards system. Using your credit card to buy certain items can earn you money, plain and simple. Some cards offer a flat rate on all purchases, like 2% back on everything you buy. Others have a tiered system, like 3% back on groceries, 2% on gas, and 1% on all your other purchases. Cash-back credit cards can be a good option if you use your credit card for everyday spending.
Instead of cash back, some rewards credit cards earn points. Points can be redeemed for dollars, but how many points you earn for certain items depends on the card’s rewards structure and redemption value. It’s important to note that points can’t always be directly redeemed for cash. Some cards may only let you redeem points for things like travel or gift cards, and redeeming for statement credits is often most equivalent to cash value.
Travel Credit Cards
Some airlines offer rewards in the form of miles that can be redeemed when you’re booking your next trip. Some miles-based credit cards start with points— a certain number of points can be redeemed for a certain amount of airline miles. If you don’t travel very often, a cash back card might be a better option.
For first-timers, some of the more lucrative rewards cards can be harder to qualify for. Start with a basic credit card first to build up your credit score, then try for a better offer.
“The objective is to graduate to a better product,” says Bruce McClary, vice president of communications for the National Foundation of Credit Counseling. You may not qualify for the best rates and terms to start with, says McClary. But, it’s a starting point to credit-building.
Secured Credit Cards
Compared to rewards cards that require good or excellent credit, you won’t get as many rewards or perks with a secured credit card. Instead, this type of credit card is ideal for building or improving credit scores. Upon account opening, you’ll need to make a security deposit (usually at least $200) which will act as your credit line. Over time, if you use the card responsibly by paying your balance in full each month and keeping your credit utilization low, the card issuer may refund your security deposit and offer you an unsecured card based on your improved credit score and credit history.
Balance Transfer Credit Cards
A balance transfer credit card can help you save money and pay off existing high-interest credit card debt faster. These cards offer 0% introductory APR periods to help you pay down your transferred debt without interest for a limited time. After the introductory period on the balance transfer APR ends, you’ll pay the regular APR on the remainder. The goal is to pay as much of your debt as possible during the introductory offer, since your entire payment will go toward the principal balance.
Types of Credit Cards by Credit Score
The credit cards you qualify for will greatly depend on your credit score and credit history. You should also think about other factors that will help narrow down your credit card choice. For instance, you may choose a student credit card if you’re in college or a business credit card if you’re an entrepreneur. Here’s a breakdown of which credit card may be best for you based on your credit:
|Credit Range||Which Credit Card Is Best|
|Building Credit||A secured credit card, student credit card, or a credit card with alternative approval|
|Poor or Fair Credit||A secured credit card or credit card with alternative approval|
|Good to Excellent Credit||A rewards credit card, cash back credit card, or balance transfer credit card if you have existing debt|
3. Know What You’re Signing Up For
Credit card offers, rewards and perks can seem enticing. But remember that a credit card is a type of loan that comes with terms and conditions that can be detrimental if you aren’t aware upfront. Always review applicable fees, interest rates, and your full credit card agreement beforehand. If you have questions, contact the credit card issuer to ask.
When you apply for a credit card, the issuer makes a hard credit pull, which can temporarily affect your credit score. Multiple applications within a short time frame can have a negative impact on your credit, so you should be selective about any card applications you submit. Take time to find a card that offers the best chance of approval and fits your needs before you apply.
Here are some other things to keep an eye out for:
Interest Rates and APR: Credit cards have high interest rates compared to other types of loans, so carrying debt from month to month will add extra interest costs.
Annual Fees: Some credit cards come with an annual fee that can be expensive if you don’t get enough value from rewards to offset the charge. Consider whether the card’s perks and benefits make up for the cost before you apply for an annual fee card.
Foreign Transaction Fees: You may be charged a fee for each transaction made abroad depending on your credit card. Most foreign transaction fees are up to 3%, but they’re often waived, especially on travel credit cards.
Missed payments: Failing to make your monthly payments by the due date can lead to penalties and fees, plus it will hurt your credit score.
Credit Limit: Your credit card limit is the amount you may spend on your card. It’s best to avoid using all of your credit limit to maintain good credit, since credit utilization rate is a major factor in your credit score. Experts recommend only using 30% of your credit line to keep your credit utilization ratio low.
Welcome Bonus: Most credit cards offer a one-time welcome bonus to new cardholders to earn more rewards if they reach a spending requirement within a period of time after account opening. If you have a big purchase coming up, it’s best to time your application with your purchase to earn the reward without overspending.
4. See if You Can Get Pre-Approved
Some credit card issuers offer preapprovals that allow you to gauge your chances of approval before applying and undergoing hard pull on your credit. The card issuer may still look at your credit score, history, income, and other financial factors to determine your preapproval. It’s best to apply for a card that you best qualify for. You may receive preapproval offers in the mail, or you can check your credit card issuer’s website to see if you prequalify for a credit card.
Before you try to get preapproved, you can increase your approval chances a few ways:
- Get an understanding of your credit report and credit score
- Keep your credit utilization low
- Pay off any outstanding debt
- Pay your bills on time
Don’t forget to consider cards from community banks or credit unions in your area. These cards often offer comparable rewards to major issuer cards, but may be easier to qualify for, especially if you already have an account history with the bank. Before you apply, compare all the card offers you find, factoring details such as your spending habits, likelihood of approval, access to branch locations, and long-term card use into your decision.
Once you’ve chosen your card, online-only or otherwise, you can usually apply entirely online. Have all of your information readily available, like your social security number. Make sure you include all sources of income on your application to improve your debt-to-income ratio, a factor that can impact your creditworthiness. Here’s a breakdown of how it will go:
- Before you apply, compare all the card offers you find, factoring details such as your spending habits, likelihood of approval, access to branch locations, and long-term card use into your decision
- Once you’ve chosen your card, online-only or otherwise, you can usually apply entirely online
- Have all of your information readily available
- Make sure you include all sources of income on your application to improve your debt-to-income ratio, a factor that can impact your creditworthiness
How Do I Improve My Chances of Approval?
The best way to increase your chances of getting approved for a credit card is by improving your credit score. If you don’t already have great credit, look for credit cards within your credit range. With less-than-perfect credit, you may not qualify for a travel rewards credit card right now. But your chances of getting a secured credit card are higher. You may also look for credit cards with alternative approval requirements to increase your chances based on factors beyond just credit score.
If you’re denied, you can follow up with the issuer to ask why you weren’t approved and ways you can improve your approval chances in the future. You may need to reduce your credit to debt ratio, credit utlization, or other factors. Keep an eye on your credit score for any errors or changes.
Do I Need to Apply Online for a Credit Card?
You can often apply for a credit card in-person if the issuing bank has a location near you, or by mail — but for many people, it’s can be simpler to apply for a credit card online. Whichever application method you choose, you’ll need to have all of your information handy, including your income and Social Security number. Also keep in mind that some credit card offers, rewards, and sign-up bonuses are only available if you apply online.
How to Make Monthly Payments
After account opening, you can pay your monthly credit card bill online or via your issuer’s mobile app. In some cases, you may be able to pay by mail, but you should be careful to ensure your payment is on time. You may also be able to schedule automated payments directly from your checking or savings account to ensure your bill is never late. If you make a late payment or your payment is returned, you may have to pay a fee or face a penalty APR. And while you’re only required to make the minimum payment, it’’s best to pay your balance in full each month to avoid high-interest debt.
Are There No Annual Fee Credit Cards?
There are many credit cards with no annual fee, and you can even earn rewards and a sign-up bonus from a no annual fee card. Most credit cards with no annual fee are best for everyday purchases, building credit, and maximizing cash back. Keep in mind that there may be other fees — such as foreign transaction fees, returned payment fees, balance transfer fees, and cash advance fees to consider.
What are the Best Credit Cards to Get?
The best credit card for you depends on your current financial situation, financial goals, and spending habits. Before you apply for any new card, it’s smart to compare several different options you may qualify for to ensure you get the card with the best value for you. To help you get started, here are a few of our favorite credit cards available today:
- Chase Freedom Unlimited® Card
- Blue Cash Preferred® Card from American Express
- Capital One Venture Rewards Credit Card
- Chase Sapphire Reserve® Card
- Wells Fargo Reflect® Card
- Citi® Double Cash Card
- Capital One QuicksilverOne Cash Rewards Credit Card
- Capital One Spark Cash Plus Card*
- American Express® Business Gold Card
Once you have a credit card in hand, “only spend what you can pay off in full every month,” says Matt Sheridan, CFA, and senior lecturer at the Ohio State University Fisher College of Business Department of Finance.
The most important thing you can do for your credit is to make payments on time. Payment history accounts for 35% of your credit score. In addition, if you’re late, you can be charged fees at the discretion of your creditor, adding to your existing balance. If you’re more than 30 days late on a credit card payment, it will stay on your credit report for up to seven years.
Pay attention to when your payments are due, your credit limit, and how you could be subject to additional fees by your issuer. “Set a monthly calendar reminder to make payments prior to the due date,” says Sheridan. Automatic payment is also a great way to stay on top of on-time payments.
*All information about the Capital One Spark Cash Plus has been collected independently by NextAdvisor and has not been reviewed by the issuer.