Starting Your Credit Card & Credit Application the Smart Way

In today’s fast-paced world and penny-pinching economy, plastic has become our country’s most widespread currency. If you’re setting out to get your first credit card, you want to make sure your application has the best chance of success. Whether you’re a student working toward financial independence or an adult who has never needed credit before now, the following tips can help you make smart choices that will streamline the process of receiving your own credit card.

1. Know What Card Companies are Looking For

Some credit card offers claim to be pre-approved and easy for anyone to get, but that may or may not be true. Even pre-approved cards require you to go through an application process in which card companies check your credit history. If you don’t have any previous credit established, the card issuer will want to see proof of your income, usually for the past several years, before they will approve you for a line of credit.

Student cards are the exception, as those enrolled in college will usually find it much easier to get a card than other demographics (see point #2, below).

2. Choose Your Timing Wisely

If you’re about to graduate from college and you don’t need a credit card yet, but you know you will soon, don’t wait! Apply for a student card today to take advantage of your academic status and get your foot in the door. You can always update your personal information in a few months to let the card company know when you’re no longer a student.

Conversely, don’t apply for a card if you’ve recently lost your job. It’s smarter to wait until you have stable employment again, rather than risking a rejection that will show up on your credit score for future card companies to see.

3. Apply for One Card at a Time

It might seem prudent to apply for several cards all at once, to increase your chances of getting one. What you might not realize is that every time a card company checks your credit score, your rating takes a small hit. Multiple companies running credit checks simultaneously can actually do damage to your credit worthiness, so it’s best to wait and apply for one card at a time.

4. Pick the Right Credit Card for Your Purpose

There are thousands of credit cards available, each with its own unique offerings. From points cards that deliver bonuses to membership cards that reward you with free movies, early access to concert tickets, or upgraded flight options, you’ll want to choose the card that delivers the benefits you want – at a cost that seems reasonable to you (see point #6, below).

It’s usually wise to avoid credit cards issued by stores or business chains, like Exxon or Macy’s. Cards from the major credit bureaus like Visa, MasterCard, and American Express are accepted worldwide, typically offer lower interest rates, and are infinitely more practical.

5. Take an Active Interest in APR

Credit cards aren’t created equal, and one of the biggest variances is interest rate, or APR. Some cards offer rates as low as 14%, but rates of 18-21% are common, so make sure you know what you’ll be paying before you apply.

You may be planning to pay off your credit card balance every month; in that case, the APR won’t matter as much. If you’re not, though, a better interest rate can save you hundreds or thousands of dollars each year.

6. Avoid Extra Fees

Many cards charge monthly fees, especially those that give you points or additional benefits, but there are just as many that are totally free. Unless the bonuses you’re getting are worth what you’ll pay each month, choose a card without a fee.

7. Set the Limit Wisely

Credit card applications often ask about the credit limit you’d like to receive. Think carefully about this number, because too high a limit may mean that your application will be rejected, while a low limit may not give you the freedom to use your card as you’d like. When in doubt, consult a credit professional at your bank or the credit card company where you’re applying.

Follow these sensible tips and you’ll soon be on your way to securing your first credit card, a big step toward building financial stability and responsibility.

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