How to Apply for a Credit Card for the First Time

Applying for your first credit card is an important financial milestone. Yet before you choose a credit card offer and start entering your personal information into a credit card application, it’s a good idea to do some basic research.

Understanding how the credit card application process works might put you in a better position to qualify for your first account. Plus, it’s important to learn the best practices for using your new credit card if a credit card company approves your application.

Applying for your first credit card

When a credit card company receives your application for a new account, it’s helpful to understand what happens behind the scenes after you hit the submit button. In general, when you apply for a credit card you fill out an application online with personal details like your name, address, date of birth, Social Security number, and income. From there, a credit card issuer will use that information to assess your risk as a potential customer and to determine your eligibility for a new credit card account.

As part of your application, the credit card issuer will typically review your credit report and credit score from at least one of the major credit bureaus (Equifax, TransUnion, or Experian). So before you apply, you may want to check your own credit report and credit score.

Checking your own credit details upfront can give you an idea of where you stand before a credit card issuer reviews your information. It can also let you know if you have any errors or inaccurate information on your credit report. If you discover credit errors, you may want to dispute those items before you submit your credit card application.

Getting your first credit card with no credit history

As someone applying for their first credit card, there’s a good chance you have no previous credit history established. But even if you believe your credit reports are completely blank, it’s important to review your three credit reports and make sure there are no unpleasant surprises waiting for you.

If you confirm you have no credit history, a first credit card could be an effective way to build credit. Still, you’ll want to be strategic about the types of credit cards you apply for when you’re in this situation.

Having no credit could make you ineligible for certain credit card accounts. Some credit card offers may require you to have a good credit score or even an excellent credit score to qualify for financing. Yet there are several credit card options for consumers with no credit, including the following.

• Secured credit cards: When you open a secured credit card, you make a cash deposit upfront that serves as collateral for the account. The credit card issuer usually places this security deposit in a savings account or certificate of deposit (CD). Because card issuers can keep your security deposit if you default, these cards typically feature more lenient approval criteria—even if you have no credit or a bad credit score.^[1]
• Student credit cards: Student credit cards may also be worth considering if you have little to no credit history. These types of credit cards may come in secured and unsecured varieties and may be a good fit for college students who are just beginning the credit-building process. But keep in mind that if you’re under the age of 21, you’ll need an adult co-signer (age 21 or older) or you’ll need to prove you have sufficient income to afford the account on your own.^[2]
• Unsecured credit cards for no credit: Some credit card companies design unsecured credit card offers for people with limited or no credit history. Unsecured credit cards don’t require a security deposit. But if you apply for an unsecured credit card with no credit, there’s a good chance you’ll pay a higher APR and possibly higher fees than you might face compared to credit cards for good credit.

How long does it take to be approved for a credit card?

Once you fill out your full credit card application, it typically only takes a few seconds for a credit card company to process your information and come back with a decision—as long as you applied for the account online. In some cases, however, a credit card issuer might ask you for additional information. If this happens, the application process could take longer to process.^[3]

Most credit card companies will also let you apply for a credit card over the phone or via mail if you don’t want to submit your application for a new account online. But if you don’t apply online, it may affect how quickly a card issuer processes your application. Additionally, with some credit card companies, you need to be at least 21 years old to apply for a credit card over the phone.^[4]

Factors credit card issuers consider when you apply for a new account

In general, applying for a credit card online is the fastest way to find out whether you qualify for a new account. Yet even though decisions tend to be speedy with online credit card applications, the software a card issuer uses will still complete several steps before it determines whether to approve or deny your application.

Below are some of the details credit card companies may consider when reviewing your credit card application.

• Identity verification: If any red flags indicate that the information on your application doesn’t match the details on your credit report, a card issuer might deny your request for a new credit card account.
• Credit check: A credit card company will review your creditworthiness before approving or denying your credit card application. Both your credit score and credit report will need to meet the minimum criteria to qualify for a new account. If you have no credit, keep that in mind when you decide which type of credit card may be a good match for your first credit card application.
• Debt-to-income ratio: Whether you’re applying for your first credit card or your tenth credit card, the card issuer will typically calculate your debt-to-income (DTI) ratio when you apply for a new account. A lower DTI ratio could work in your favor when you apply for a credit card. So, if you want to enhance your qualification odds, consider paying down your debit or increasing your income. Keep in mind that it’s usually fine to include household income—such as income a spouse or partner earns—on your credit card application. But you need to have reasonable access to those funds (such as through a joint account or shared finances) to list them on a credit card application.^[5]

What is a pre-approval for a credit card?

When you apply for a new financial product, like a credit card or loan, the credit card issuer or lender will review a copy of your credit report as one of the steps to determine if you qualify for the account. This type of credit check is known as a hard credit inquiry.

A hard credit inquiry has the potential to damage your credit score (though typically only to a small degree and only for up to 12 months). Hard inquiries aren’t worth a certain amount of points where your credit score is concerned. But for many people, the addition of one additional hard inquiry should result in the loss of less than five points off their FICO Scores. However, if you seek a lot of new credit in a short period of time—like applying for a bunch of credit cards at once—the potential credit score damage could be more severe.^[6]

Yet several credit card companies will let you see if you pre-qualify for a credit card offer with only a soft inquiry of your credit report. This type of pre-approval process can be helpful because it lets you know if you’re likely to qualify for a credit card offer without any potential credit score damage. Depending on the card issuer, getting pre-approved may also give you a basic idea of your interest rate before you fill out an official credit card application and submit to a full hard inquiry.^[7]

However, it is important to keep in mind that a credit card pre-qualification isn’t the same as an official approval. When you fill out your full credit card application a credit card company will take other details into consideration, like your income and employment history. So, there’s a chance a card issuer could turn your credit card application down after pre-approving you.

What to do if you don’t qualify for a credit card

Having a credit card issuer deny your application for financing can be stressful. Yet if you experience this unfortunate situation, it’s important to take a deep breath and try to figure out what went wrong. Once you understand the problem (or problems), you’ll be in a better position to improve your odds of qualifying for a credit card the next time you apply.

Here are some steps you can take if a credit card company denies your application.

• Ask for reconsideration. Depending on why the card issuer denied your application, you might be able to ask for reconsideration. If you forgot to lift a credit freeze that was protecting your credit report from identity theft, for example, you could contact the appropriate credit bureau and correct the problem. From there, the card issuer might be willing to review your application again once it’s able to access your credit report.
• Review the adverse action letter. If a credit card company denies your application and is unwilling to reconsider, the lender is required to send you an adverse action letter. The letter may contain up to five reasons explaining why the lender denied your application for financing. Once you receive this letter (typically within 10 business days after the lender’s decision), you can use this information to help guide you through future decisions about applying for credit. For example, if a card issuer denied your application because you don’t have enough credit history, you could work to build credit in other ways before reapplying or look for credit card offers for people with no credit.^[8]
• Consider alternatives. If you can’t qualify for a credit card and you’re not interested in credit cards for no credit (like secured credit cards), consider ways to build credit without a credit card in the meantime. A credit builder loan is another option that could help you establish credit. And you could also look into becoming an authorized user on a friend or family member’s credit card without applying for an account of your own.

Using your first credit card

Opening a credit card for the first time has the potential to be an effective credit-building tool when you have no previous credit history. But it’s important to understand that the way you manage your new card will ultimately determine the impact the account has on your credit score.

If you use your credit card in a responsible manner, the account could lift your credit score over time. Yet manage your new credit card poorly and you might see your credit score decline instead.

Below are some expert tips on the best ways to handle your first credit card after you open it.

• Pay on time. The most important rule to follow after you open your first credit card is to always pay your monthly credit card bill on time. Most credit card issuers will let you schedule automatic payments to make sure you don’t miss your due date by accident. Even if you can’t afford to pay off your full statement balance (see below), you should pay at least the minimum payment due on your account each month to keep your account in good standing. At the very least, paying the minimum balance due helps you avoid late payments on your credit report and late fees.
• Pay the full amount due. Although paying the minimum amount due will help you avoid late payments, the truth is you should never charge more on your credit card than you can afford to repay in full each month. When you pay off your full statement balance every billing cycle, you can use your credit card without having to pay your card issuer expensive interest charges. On the other hand, if you pay less than the full balance (or worse, if you pay just the minimum amount due), you’ll find yourself in credit card debt. Credit card debt not only can cost you a lot of money in interest charges, a high credit utilization ratio can also damage your credit score.
• Review your statements. Keep an eye on your credit card statements each month. This good habit can help you make sure you don’t overspend on any of your budget categories. It can also help you spot unauthorized charges if someone uses your credit card without your permission.
• Report lost or stolen credit cards immediately. If you misplace your credit card, either due to loss or theft, it’s important to inform your credit card company right away. Federal law protects you if someone else makes unauthorized charges on your credit card. But it’s your responsibility to let your card issuer know that the card is lost or stolen and to dispute fraudulent charges within 60 days.^[9]
• Consider asking for a credit limit increase. If you feel like you’re managing your credit card well and you’re avoiding credit card debt, you might consider asking for a credit limit increase after enough time passes. A higher credit limit could make it easier to maintain a low credit utilization ratio. But beware—if you’re having trouble repaying your full credit card balance each month, asking for a higher credit limit could lead to more temptation.

Bottom line

A credit card isn’t the only way to establish credit for the first time. But these flexible financing tools do have credit-building potential when you use them in a responsible way.

Just remember, it’s important to do your research before you apply for your first credit card. Not every credit card account will be a good fit for you when you have no credit history. And if you apply for a credit card offer that requires a good credit score before you’ve had a chance to establish credit, you might not qualify.

Once you open your first credit card, make a plan to use the account wisely. On-time payments and a low credit utilization ratio are key. After you consistently follow good credit management habits over time, your efforts will hopefully start to pay off.

Sources

1. Equifax.com. “What Is a Secured Credit Card and Does It Build Credit?” https://www.equifax.com/personal/education/credit-cards/articles/-/learn/what-is-a-secured-credit-card-do-they-build-credit/
2. Equifax.com. “Student Credit Cards: What Are They & How to Get One.” https://www.equifax.com/personal/education/credit-cards/articles/-/learn/student-credit-cards-what-are-they-how-to-get-one/
3. Experian.com. “What Happens After I Apply for a Credit Card?” https://www.experian.com/blogs/ask-experian/what-happens-after-i-apply-for-a-credit-card/
4. Discover.com. “How to Fill Out a Credit Card Application Online.” https://www.discover.com/credit-cards/card-smarts/how-to-fill-out-a-credit-card-application/
5. Experian.com. “Can I Use My Spouse’s Income for My Credit Card Application?” https://www.experian.com/blogs/ask-experian/can-i-include-spouses-income-on-my-credit-card-application/
6. myFICO.com. “Credit Checks: What are credit inquiries and how do they affect your FICO® Score?” https://www.myfico.com/credit-education/credit-reports/credit-checks-and-inquiries#:~:text=For%20most%20people%2C%20one%20additional,inquiries%20also%20mean%20greater%20risk.
7. Nerdwallet.com. “Credit Cards That Offer Pre-Qual or Preapproval Without a Hard Pull.” https://www.nerdwallet.com/article/credit-cards/credit-cards-that-offer-preapproval-without-a-hard-pull
8. Experian.com. “What to Do When Your Credit Card Application Is Denied.” https://www.experian.com/blogs/ask-experian/what-happens-if-i-get-denied-for-a-credit-card/
9. Consumer.ftc.gov. “Using Credit Cards and Disputing Charges.” https://consumer.ftc.gov/articles/using-credit-cards-and-disputing-charges