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In a nutshell
Opening your first credit card account and then staying on top of your payments can help you get approved for a better card in the future.
- To get approved for a credit card, you'll need good credit and a low debt-to-income (DTI) ratio.
- If you get denied, work on growing your score by practicing sound financial habits.
First things first: Understand your credit score
Having a solid travel or rewards credit card can open the door to robust introductory bonuses, the opportunity to rack up points to use for purchases or travel and other valuable perks. These rewards and travel credit cards are attractive; they also require you to have a solid credit score.
Your credit score is a key factor in whether or not you get approved for a card. While your credit score is not the only thing lenders look at, it's important to understand how your credit score works.
The average FICO® Score in 2023 was 718. Most credit scores range between 600 and 750. Most card issuers don't disclose the minimum credit score needed for a credit card, and technically, there's no minimum credit score to get approved for a credit card. However, the cards with the best rates and perks require a higher score.
The two most common credit scoring systems are VantageScore and FICO. The majority of lenders use FICO. With FICO, the highest credit score you can have is 850 and the lowest is 300. (A larger number indicates a better credit score.)
| CREDIT RATING | CREDIT SCORE |
|---|---|
Poor | 300 - 580 |
Fair | 580 - 669 |
Good | 670 - 739 |
Very Good | 740 - 799 |
Excellent | 800 - 850 |
Learn more:
- What is a good credit score?
- How to build credit fast
- How to fix your credit score in 10 easy steps
Find a card that matches your needs
Getting a premium travel credit card with a $500 annual fee is like getting a luxury sports car when a mid-range sedan is all you need. (A card without an annual fee may be a better fit!) When shopping around for cards, consider the following questions:
- What types of purchases will you put on your card?
- How much do you anticipate spending on your card in a month, quarter or year?
- What rewards and perks are most important to you? Which perks would you use the most: for example, travel protection, car rental insurance or an extended manufacturer's warranty?
- What would you use your points for?
- What would make the annual fee worthwhile?
If you plan to spend your reward points on shopping, gifts and everyday purchases, a decent cash-back card might be the best fit for you. However, if you are going to maximize your purchases on flights or gas in your car, an airline or gas card might be better suited for your needs.
If you're new to the world of credit cards, consider getting a credit card with no annual fee. Once you start increasing your spending (and, therefore, maximizing the value of the card’s points and perks), a card with an annual fee may make more sense.
There are thousands of different cards to choose from. Within those cards, there are many different categories of cards: reward cards, cash back cards, travel cards, business credit cards, student cards and zero percent introductory purchase cards. It’s important to take your time narrowing down the right card for you.
Understanding what card terms mean
Getting your head around basic credit card terminology can help you understand how to use your card and your financial responsibilities as a cardholder. Here are some commonly used credit card terms.
Annual fee
If your card has an annual fee, it's usually due annually during the month you opened your card. So if you opened your account in July, the annual fee will be due in July. Generally, the higher the annual fee, the greater the perks.
Annual percentage rate (APR)
Annual percentage rate (APR) refers to the amount you'll be charged in interest and fees for any balance on your card. A given card typically has a range of APRs: the purchase APR, introductory APR, balance transfer APR, fixed APR, variable APR, cash advance APR and penalty APR. In a nutshell, the APR is a number that lets you make apples-to-apples comparisons between cards.
Balance
Your balance is the amount of money you owe on the card. That definitely includes the purchases you make, but it may also include other charges as well like cash advances, refunds and balance transfers. If you don't pay your purchases off in full at the end of the monthly billing cycle, you'll also be charged accrued interest, as well as possibly penalties for late payments.
Billing cycle and the grace period
The billing cycle is the period between your closing statement dates. According to the CARD Act, billing cycles must be at least 21 days. A grace period is the period of time between the date of your statement and the date your monthly payment is due. During this period, interest does not accrue.
Late payment fee
If you do not make a monthly payment, you'll be charged a late-payment fee. The good news is that recently, the Consumer Financial Protection Bureau (CFPB) recently changed a rule relating to Regulation Z, which previously allowed credit card issuers to charge up to $32 for late payments. Now the most they can charge is $8.
Minimum payment
A minimum payment is the smallest dollar amount you can pay on your credit card balance each month. If you make a payment that is less than the minimum payment, you might be charged a late fee.
Try for pre-approval
A card issuer might offer a pre-screening option to see if you meet the criteria in order to be eligible for a preliminary credit card offer. Card issuers typically send pre-qualification or pre-approved offers in the mail or via email.
The process for getting pre-approval is pretty straightforward: After providing basic personal and financial information, the lender will review your information and let you know if you've been preapproved. The issuer will provide you with the rates, terms and credit limits that you'll likely get approved for.
With pre-approval, creditors only do soft credit checks so it won't negatively impact your credit score. You can also try to get preapproved for a credit card directly on the issuer’s website.
Prepare for a dip in your credit score
When you apply for a credit card, you'll see a slight decrease in your credit score; it will typically be no more than five points. While hard credit inquiries linger on your credit report for up to two years, they typically only impact your score for a few months. If you are concerned about your score dropping, it may be a good idea to only apply for one credit card.
Personal and financial information needed to apply
While credit card issuers might have slightly different criteria for credit card approval, they will usually ask for this information:
- Full name.
- Physical address.
- Date of birth.
- Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN).
- Estimated annual gross income.
The credit card company might also ask for additional information, such as your employment history and the type of work you do.
Apply online for faster approval
To speedboat the application process, apply online: you'll know whether or not you are going to get approved quicker than if you mail your form. Whether you're applying online or dropping an application in the mail make sure you fill out all required fields.
What to do if you are denied
If your application for a credit card gets denied, you can ask why your application was denied. The Equal Credit Opportunity Act requires that card issuers explain the reasons why your application was denied. Once you know, you can either wait a few months and apply for a different credit card or work on improving your credit score and apply for the same card again. Stay on top of your loan payments, but keep all lines of credit current and open and only apply for new credit when necessary. You can also sign up for a free credit monitoring service, which detects key changes in your credit score and financial behaviors.
The AP Buyline roundup
Applying for a credit card involves more than inputting your personal information and hitting "submit." Before you apply for a card, do your homework and figure out what type of card is a fit for your needs. Once you understand basic credit card terminology, you’ll have a better chance of choosing the best credit card for your needs.
Frequently asked questions (FAQs)
What is the easiest credit card to get right now?
Student cards and secured credit cards are generally easier to get approved for because they have lower minimum credit score requirements.
What is the minimum credit score for a credit card?
Technically, there is no minimum credit score to get approved for a credit card. A score of 700 will likely get you approved for a good standard card.
Why do credit card applications get declined?
There are many reasons why a credit card application might be declined. Low credit score, little or no credit history, high debt-to-income ratio, unsteady employment, low income and high credit usage are a few reasons why one might get denied a card.
AP Buyline’s content is created independently of The Associated Press newsroom. Our evaluations and opinions are not influenced by our advertising relationships, but we might earn commissions from our partners’ links in this content. Learn more about our policies and terms here.
