From deciphering so-called basic financial terms to navigating card comparisons, applying for a credit card is intimidating enough to make you want to cling to your debit card and turn a blind eye to the concept of credit entirely. If just the thought of looking up your credit score is making you feel anxious right now, we're here to assure you that the process of applying for a credit card isn't nearly as difficult or painful as you might think.
To help assuage your financial fears, we asked Nicole White, content strategist at Swell Investing, all our most pressing questions about applying for a credit card, beginning with the most basic: Why should you apply for one? "Everyone needs credit," she tells MyDomaine. "You certainly don't need to use it, but you do need an official established history of your on-time and in-full payment history—that's what credit is," she explains. "Apartments, cars, some jobs, utilities, mortgages, some bank accounts, and renting cars all require credit."
If you don't have a credit card, don't panic—we've got you covered. Here's everything you need to know about applying for a credit card, including how to navigate the next steps if your application is denied.
What info do you need for the application?
To literally fill in the boxes, you simply need your current information and your Social Security number. But to ensure you're setting yourself up for success, White advises going a step further and thinking about the overall state of your finances before submitting an application. "It’s best to be armed with as much info as possible," says White. "Check your credit report (you get one free per year at Annual Credit Report.com), and your score at a free site like Credit Karma."
Once you have a sense of where you stand financially, you can start comparing cards to narrow in on the one that's right for you. "Think about what perks you'd like: travel rewards, cash back, store-specific bonuses, etc.," says White. "Credit card aggregator sites like NerdWallet are a great resource for checking out the likelihood of acceptance, since they typically have score ranges for each card."
Who should apply for a credit card?
So who should get a credit card? "Anyone who is ready for the responsibility," advises White. "Building and rebuilding credit are both unique challenges that are not to be taken lightly," she explains. "It's not free money—it's a tool to use to build your future."
When it comes down to whether or not you should fill in those application boxes, consider how you're currently managing your money. "If you have trouble keeping tabs of the hundreds that you have, don't saddle yourself with the responsibility and temptation of thousands," advises White. "You know yourself best: Be honest, and act with future you in mind."
If you don't have a credit card and you think you've waited too long to start building credit, think again. "It's never too late to apply for credit," says White. "You may need to prove yourself a bit with a secure card, but you're never out of the game."
What's the most common mistake to avoid?
Filling out a credit card application is a relatively straightforward process; it's fairly similar to entering your billing information when you make an online purchase. So what's the biggest mistake you can make? "Applying for too many all at once," according to White. "Every check into your credit report—which is made each time you apply for a line of credit—counts as a 'hard inquiry' and dings a few points off your score. Enough of those in a short amount of time isn't a good look and will ultimately do more harm than good."
What do you do if your application is rejected?
So your application got rejected… While this scenario is obviously not ideal, don't let it discourage you. To help you bounce back, we asked White exactly how to navigate the next steps. Her first piece of advice? "Don't panic," she tells us.
"They'll send you a little explaining their rationale for the rejection," says White. "Use that letter as an opportunity to review your report and make a plan for progress. If you were denied because you don't have enough credit to get credit (frustrating!), explore opening a secured credit card. With those, you essentially give the creditor the full balance of your new line of credit up-front straight from your bank account."
If you're not confident about remembering when to pay your bills, go ahead and set up automatic payments. That way you never have to worry about making a late payment, or worse, missing a payment altogether. "After a few months of on-time and in-full payments, you will establish a positive history and should be able to move on to real, legit credit," says White.
Opinions expressed are solely Nicole's and do not express the views or opinions of her employer.