Applying for a credit card is as easy as filling out a form online or dropping into a branch of your preferred financial institution. But getting approved isn't always so simple.
Before you apply for a credit card, you want to make sure you meet the criteria for that particular card. Read on to find out how to apply for a credit card and increase your chances of being approved.
One of the most important things you can do before applying for a credit card is making sure your credit is in order. You can find out your credit score from the top credit bureaus without impacting your score. But what do you do with the information?
In general, credit scoring systems use a range of 350 to 850 with the breakdown as follows:
- Excellent credit: 720 to 850
- Good credit: 690 to 719
- Fair credit: 630 to 689
- Bad credit: 629 and below
Credit Score and Types of Credit Cards
Credit cards come in two main types: secured and unsecured. You usually need a higher credit score to qualify for an unsecured credit card so be sure to find out your score and apply for the right credit card for your financial situation
Secured Credit Cards
Secured means your financial institution keeps some of your funds as collateral. The funds could be in a savings account or a Certificate of Deposit, or you could make a cash deposit.
You can apply even if your credit is bad or fair. You may also apply if you're just starting on your financial journey and don't have any credit history yet. The interest rates may be slightly higher for this type of card.
Unsecured Credit Cards
With these cards, your financial institution is not holding any of your funds as collateral and so you will likely need a better credit score to qualify.
A higher credit score means you're more likely to get approved. Plus, the higher your credit score, the lower your interest rates.
Improving Your Credit Score
If your credit score is not great, do not fear. There are a few ways you can repair your score and build it up.
If your credit needs improving, you may still be able to get a secured credit card and start building your credit. Pay at least the minimum each month and stay well below your credit limit. Your score should start to improve within months but may take longer to get good or great credit.
Bring in the Family
Believe it or not, your family can help build your credit. You can become an authorized user on a family member's credit card. This is a good place to start because you'll build credit each time you pay off your purchases on your family member's card.
Establish a Joint Personal Loan
If you can't qualify for a personal loan on your own yet, build credit by taking out a joint loan and paying on time each month. Use the loan to consolidate debt or to cover any other expenses.
How to Apply for a Credit Card in Three Easy Steps
Once you've figured out what type of credit card fits your financial situation, it's time to collect your documents and choose a lender.
Follow these steps to get approved:
1. Shop Around for the Right Card for You
Compare your local financial institutions and see what cards they're offering. If you need a secured card, make sure the lender is providing one. Find out about the interest rates, fees, and reward programs.
Note that the annual percentage rate (APR) you see advertised will show a range of percentages. The lower rate will apply to a person with good credit, so expect a higher rate if your score isn't so great.
2. Gather Your Information
If you're applying for a credit card with a credit union, you'll need to become a member first.
Depending on what card you're applying for, you may need some or all of the following:
- Your ID
- Proof of birth date
- Proof of address
- Proof of income
- Social Security number
Now that you've chosen your financial institution and card, just go to the website and find the apply button! Enter your details and you'll be on your way.
You can also apply in person at your local branch if you prefer.
Note: When you apply for a credit card, the lender will usually run a credit check on you and your credit score will fall by a few points. If you apply for multiple cards, it will hurt it more. The good news is, your score will bounce back once you start making timely payments.
Handy Tips for Using Your Credit Card
Now that you know how to apply for a credit card and get approved, here are some tips to make the most of your credit card experience:
- Pay on time each month. If possible, pay your balance off in full or pay well above the minimum payment. This will ensure your credit keeps improving.
- Use less than 30% of your limit. The amount you use of your credit card limit is called a credit utilization ratio or debt-to-credit ratio. The better your ratio, the better your score.
- Take advantage of rewards. If you get a card with rewards, be sure to make the most out of features like cashback on qualifying purchases, or points you can redeem.
- Take advantage of fraud protection. A credit card may offer more protection from fraud than a debit card, so use it for online shopping then pay it off with your checking funds.
- Upgrade from secured to unsecured. If your credit score suits a secured card right now, check when you might be able to upgrade to an unsecured card with lower rates.
How to Apply for a Credit Card With Greater Texas Credit Union
Getting a low-interest credit card is a great way to build credit so you can qualify for any other financing you may want later in life, from an auto loan to a home loan. A credit card also provides a useful safety net so you can meet unforeseen expenses.
Once you've got your information and documents in order, all you have to do is click the apply button and fill out your details. Until then, click below to learn more about a few of our top credit card options!