Credit cards are an incredibly useful tool if used responsibly. They help you meet your financial goals in multiple ways. Credit cards can help build credit, and if used to its maximum potential, can also be another way to earn extra cash! But how do you get a credit card though, especially if it’s your first time?
Applying for a credit card can seem daunting, but once you get the hang of what banks expect, its a piece of cake!
If you are coming from just cash or debit cards, applying for a credit card might seem intimidating, and after hearing the horror stories from many that own credit cards, you might be a little skeptical about if you should get one yourself! The good news is you found this blog, so let’s walk through the process and show you how to apply for a credit card for the first time.
1. Check your credit score
Before applying for any type of credit, it’s important that you know what your credit score is. This will help you figure out what kind of credit cards you would qualify for, and also help set your financial goals correctly.
Typically, the higher the score, the better the credit card you would qualify for (such as travel cards with the highest rewards and bonus points). However, if this is your first credit card, then I would strongly recommend getting a more basic credit card to help you get used to how they work!
So what’s a good credit score?
Basically, a credit score is a score that is given between 300 and 800. The higher the number the better. The formula used to determine your credit score is unknown, but here are the factors that affect your credit score:
- Payment history
- Credit utilization
- Credit history length
- Credit mix
- New credit
Some factors affect your score more than others, but generally, if you maintain the above items, your score will also reflect that. I wrote more about credit scores here.
I personally use Credit Karma to get a general idea of what my credit score is, so I recommend you sign up and take a look for yourself to see what your credit score looks like. Check them out.
2. Pick which credit card to apply for
Now comes the fun part! After you’ve determined your credit score, its now time to figure out what credit card you want to get! Depending on what your credit score is, that will determine what kind of credit card you would qualify for.
If your credit score was on the lower end, you should opt to apply for a secured credit card, or become an authorized user on someone else’s credit card. This can be a very close friend, family, or spouse. By doing so, it will reflect on your credit score, and with disciplined use, can also improve your score.
If your score was on the higher end, then you will see loads of potential options that you can choose from! The best tool I can recommend to get started is using the CreditCards.com beginner cards
Here you can definitely get a good feel of beginner cards that are out there, and pick the one that has perks and features that you are looking for!
3. Apply for the Credit Card
Once you have determined which card suits your needs, you can go ahead and submit an application. Typically what the bank looks out for when looking over your application is:
- Credit History
- Employment History
- Current Income
It’s also important to note that applying for a credit card results in a Hard Credit Pull. This hard pull is reflected on your credit history. This typically dings your score a few points, but this wears off over time. It’s important not to apply for several credit cards at a time because too many dings will even lower your score!
You can apply for your chosen card online or through the mail. In this day and age, its the quickest and easiest if the application is performed online. Typically a decision is pretty much instant if you qualify or not.
If your application is not instantly approved, there is no need to worry! Sometimes the application will have to be manually looked over by a real person. This doesn’t mean that there is anything wrong with your application, but sometimes there might have been a glitch in the application, or it might be your first time ever applying. Whatever the reason, no need to worry!
4. Limit your applications
Here’s the thing with credit scores. The more you apply for credit, the more your credit score is dinged with credit inquiries. That doesn’t look good on your report!
To lenders and the credit bureau, you might seem like a greater risk if you keep applying for different credit cards. So, before you apply for anything, make sure you pick the one you want, pick the one you qualify for based on its requirements, and only apply for cards one at a time.
5. Enjoy your new credit card… Responsibly
At this point, your application would be approved, and should expect the card in the mail within a week or two! Congratulations! However, with great power comes great responsibility.
Never carry a credit card balance and pay it off every month! Thank me later ☺️
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Its VERY important that you don’t max out your credit card, as this will negatively affect your credit score. This is what’s called a High Utilization Rate. You want to use as little of the card as you can so it shows responsibility and thus improves your credit score. SO always make sure to have a spending budget and stick to it.
Final thoughts?
As intimidating as applying for a credit card might seem, it’s actually much easier than you think. Getting a credit card is the easy part but the hard part is being responsible with it! Use your credit card as a tool to reach your financial goals, and always remember the golden rule.
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