If you’re thinking about getting a new credit card, you may not know where to start. Luckily, applying for a card is a fairly simple process. Credit card companies always need new cardholders, so they’re regularly finding new ways to accommodate customers from different financial backgrounds. However, there can be more to the process than just filling out an application online. Here are each of the steps you should take when trying to apply for your next credit card:
Consider your needs
The first question you should ask yourself is why you’re getting a credit card in the first place. Credit cards can make your spending easier and more convenient, but there may be some other important motives to consider:
- Build credit: If this is your first credit card, you may be looking to build your credit score. Or perhaps you don’t have a great payment history with a past credit card and are looking for ways to repair your credit history.
- Make a balance transfer: If you have a balance on a card with a high interest rate, you might want to move it over to a card with a lower rate.
- Earn rewards: Perhaps you’ve heard about credit card rewards like points and cash back, and would like to earn rewards just for making everyday purchases.
Compare types of credit cards
Before you can apply for a credit card, it’s wise to identify several different types of cards that you’d be interested in and compare them side by side. Specifically, look at certain aspects such as:
- Annual fees: How much will you have to pay each year to be a cardholder?
- Annual Percentage Rate (APR): If you carry a balance on your account, how much can you expect to pay in interest to the credit card company?
- Balance transfer options: If you’re interested in transferring your existing balance from one card to another, is this feature available?
- Rewards: Does this credit card allow you to earn points or cash back? Are there any introductory bonuses for becoming a new cardholder?
Check your credit score
Your credit score will be a significant determining factor as to what type of credit card you can apply for. In Canada, your credit score (also called a FICO Score) is a number that ranges from 300 to 900. The higher your credit score, the more creditworthy you’re perceived to be.
Many conventional credit cards will require you to have a credit rating of Good, Very Good, or Excellent (minimum FICO Scores of 670, 740, and 800, respectively). Although there are credit cards that you can get with lower credit scores, they may come with fewer benefits, and your APR could be considerably higher. If you’re interested in knowing your current credit score, you could check with Equifax and Transunion, the two main credit bureaus in Canada.
Once you know which type of credit card you want and have checked your eligibility, it’s time to apply. Many issuers offer online credit card applications and can tell you within a matter of minutes whether you’ve been approved.
Before filling out an application, you should have all essential personal information ready to go, including:
- Legal name
- Birth date
- Employment status
- How much you earn
- Residency status
It’s smart to double-check all information you’ve filled out to ensure everything is correct. Once you submit your credit card application, you may hear back in just a few minutes about whether you’re approved.
What to do if you don’t get approved
If the credit card you were hoping to get comes back as denied, then it may be helpful to reach out to the card issuer and find out the specific reason. Perhaps you have too much debt or haven’t had your credit established for long enough. You can then use this information to focus on making the necessary improvements or apply for a card with less strict requirements. Keep in mind that if you apply and don’t get approved for a credit card, this may have a negative impact on your credit score.
The bottom line
It can be quick and easy to apply for a new credit card, but there are some steps you should take beforehand to ensure that you select the best option for your needs. Be sure to compare different products and check the eligibility requirements so that you can maximize your chances of successfully qualifying for the credit card you want.