5 Questions to Ask Yourself Before Applying for a Credit Card

By Scott Gamm

NEW YORK (MainStreet) — Not all credit cards are created equal. Simply signing up for the first credit card you stumble upon isn’t financially sound.

When tackling the credit card application process (and it is a process!), here are a few questions you want to ask yourself before you apply:

1. Why are you applying for a new card?

There are a variety of reasons why someone applies for a credit card. Maybe you’ve claimed bankruptcy recently and are looking to rebuild your credit from scratch. Or perhaps you’re a college student and are looking for your first credit card. And even if you already have a credit card, you might want to apply for a second one that has a more robust rewards program so you can start to accumulate slowly miles for your dream vacation.

The reason behind your desire to apply for a credit card will affect the type of card you should apply for. A credit card that’s appropriate for someone who just claimed bankruptcy (likely a secured credit card into which you deposit money as a security deposit) will not be the right card for someone looking to accumulate airline miles.

Get the picture? Once you know why you’re applying for the card, you’ll have a better idea of which cards should be on your radar.

2. How do I apply?

To make the process faster, once you find a credit card, apply for it online. You’ll need to provide basic contact information and your Social Security number. You’ll also need to include your annual income and in some cases how much money you have in a checking and savings account.

The credit card issuer will use this information to not only determine if you can afford to have a credit card, but what the appropriate credit limit will be given your income and financials.

3. What’s your credit like?

Just like when you’re trying to get approval for a mortgage or car loan, your credit history will play a role in the credit card application process. The higher your credit score the greater chance you’ll get approved for the card — not to mention the lower interest rate on the card, compared with someone with a mediocre credit score. A good credit score is above 720, while a great credit score is above 760.

Check your credit score at sites such as CreditKarma.com to see where you stand — this way it’s not a total surprise if you get denied. And if you do get rejected, simply apply for another card from another issuer.

4. What are the fees?

While there aren’t any fees to actually apply for the credit card, once you have the card, you may get slammed. And we’re mostly talking about annual fees.

To make this easier, apply only for cards without an annual fee. You’re throwing money away by paying an annual fee.

5. How often will you use the card?

Some sort of timeline should be crossing your mind before you apply. Is this going to be a card you’re going to use for the next decade? Or is this just a starter card so you can build up some credit to enable you to apply for a different card later on?

Plus, you don’t want to get in the habit of taking on cards and closing them down — this causes the credit score to drop. When considering which credit card to apply for, do your due diligence; you’ll ultimately want to make this card the one you use (responsibly) for years to come.

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