Q: I know this is a stupid question, but I’ve never applied for a credit card online before. How does the process work? What sources of income should I include in the “total annual income” box? Please explain how to fill out the application correctly so it gets approved.
A: First of all to have the best chance at getting approved, you have to apply for the right credit card for your circumstances.
Someone without credit history should apply for a different type of card than someone who has a good history. And if you have bad credit, then you’re in a whole other category.
In a moment, I’ll share my recommendations for the best choices by category. But first, here are the steps on how to apply for a credit card.
Step 1: Your contact info
The first questions are pretty straightforward…
In the top right you will notice the red asterisk (*) that is for the required fields. For the fields without it (such as Employer Phone Number) you don’t have to fill it out if you don’t want to.
Some people are hesitant of putting their Social Security number. Don’t worry, when you apply for a credit card online the information is encrypted using 128-bit encryption Secure Socket Layer (SSL).
This is the same encryption method used by the US government to protect classified information. 128 bit = 2 multiplied by 2, 128 times over (that means to crack it, there’s only 1 right combination out of 339,000,000,000,000,000,000,000,000,000,000,000 choices). Translation? It’s safe!
Step 2: Your employment info
The exact questions will vary depending on the bank, but obviously they have to ask about your employment status. If you are employed, they’ll ask you to fill in the name of your employer.
What do you include in income on a credit card application? The answer can be a bit murky, but for starters…
- If you are married, it means you and your spouse’s combined income
- If you are not married, it means only your income
But what’s counted as income? Well, you already see the fine print on the right which addresses alimony and child support. Aside from that, they want to know your total income from all sources. For most that’s just a salary, but some people may also have investment income to include.
Banks usually don’t publish the minimum income requirements for their cards, but most usually require applicants to be earning at least $12-15k per year in order to get approved. However student credit cards have lower income requirements; there are many reports on the forum of students who earn as little as $2 or 3k per year getting approved.
Whatever your circumstances may be, know that they’re looking for your pre-tax income (the amount before taxes are deducted).
Step 3: Your assets and liabilities
Assets. Every credit card application will ask if you have a checking and/or savings account.
In this example, they even go a step further and ask how much you have in your accounts. However that is an extremely rare question – to the best of my knowledge, only 1 of the 6 largest card issuers will ask you how much money you have.
Liabilities. You will be asked whether you own or rent, followed by how much that costs you per month. If you share a housing payment, enter the amount you are personally responsible for. For example, enter $500 if you contribute $500 of a $1,000 monthly payment.
As for other liabilities, such as loans and debt, they won’t ask you for that info. Why not? Because they can already see those when they check your credit report.
Step 4: Optional balance transfers
If it’s an option, you will be asked if you want to transfer any balances to your new account (note: this will only happen if you are approved for the new credit card).
If the offer is for 0% interest and you currently have a balance on other card(s), then it will probably make sense to switch it over. Usually when you apply for a credit card online you get longer 0% offers than what’s found offline (such as what you get in your mailbox). In either case, be aware of the transfer fee which typically equals 3-5% of the total amount.
Step 5: Read the TOS, agree, and submit
Last but not least, you will come to the fine print at the bottom – this will layout the terms and conditions for the account and offer you are signing up for. Most people don’t read this, but I recommend you do, especially if you are getting a credit card for the first time.
And how do you get approved?
There’s no such thing as 100% guaranteed approval, but follow these tips to increases your chances.
Be careful not to make typos. One of the main reasons people have their applications delayed is because they make a typo with their Social Security number, their address, or something else. If your contact info doesn’t match what’s on your credit report, then there’s a good chance your won’t get an automatic decision (and instead, it will have to be manually reviewed and processed). So to ensure a speedy process, double-check what you type in.
Choose the appropriate card for your circumstances. If you have no credit history or bad credit history, your choices will be limited. Click below to see my current recommendations by category: