Applying for a credit card can be a step towards financial stability and substantial rewards. Not only does having a credit card help build your credit history, but you can also earn valuable rewards towards travel, household expenses, and everything in between. However, these outcomes are contingent on responsible credit management; therefore, you’ll want to pay your balance off every month and avoid overspending. Once you’ve submitted your credit card application, a series of steps occur before that shiny new card arrives in your mailbox. Here’s everything that happens next:
The bank runs a credit check
Shortly after receiving your application, the bank runs a credit check and verifies your identity. This step involves assessing your credit history and score to determine your creditworthiness. There are three main credit bureaus the bank might pull from: Experian, Equifax, and Transunion. Every bank pulls from at least one of these bureaus, though Capital One checks all three. Depending on the type of credit card you’re applying for, your credit score will quickly determine whether the bank will approve you.
Typically, you need a good or excellent credit score to qualify for a travel credit card, defined as 670 or above. You’ll incur a 2-5 point credit score drop per credit inquiry, which can rebound within 1-2 billing cycles if you’re approved and use your new card responsibly. Still, you want to be mindful of the cards you apply for and avoid ones you’re not qualified for.
How to improve your approval odds
There are several steps you can take prior to applying for a credit card that may improve your approval odds. Here’s a look at three ways to achieve this:
- Review your credit score ahead of time: To enhance your approval chances, check your credit score before applying. Ensure your credit report doesn’t contain any errors that could negatively impact your score and your odds of approval for a credit card.
- Work on improving your credit score: If your credit report is accurate but your score is still low, take steps to improve it, such as paying your credit card bill on time and keeping your utilization ratio under 30%.
- Only apply for cards you qualify for: To improve your odds of approval, apply solely for cards you are likely to qualify for based on your current credit score.
Your application is evaluated
Once the bank checks your credit and determines your score is sufficient, your application will be further evaluated. Banks consider other factors, including your income and prior relationship with the bank, to assess the likelihood of you repaying your debts. These decisions are often made in seconds, resulting in either approval or denial.
Occasionally, the bank may need more time to evaluate your application, which may trigger a “needs further review” message on the application results page. If this occurs, consider calling the bank to see if they require additional information. This may be a matter of verifying your identification, which can be resolved quickly.
If approved, your card will be mailed
If your application is approved, your card will be mailed to the provided address, arriving within 5-10 business days. Some banks allow expedited shipping for a fee, while others may include it for free. This option is commonly available with premium cards.
Some banks may provide you with a virtual account number so you can start using your new card right away. This feature is beneficial for those making significant purchases immediately.
You activate your card
When your physical card arrives, you’ll need to activate it before making purchases. Typically, this can be done online or via the bank’s mobile app. Activate your card promptly to start utilizing its benefits.
You complete a spending requirement (if any)
Some credit cards come with a welcome bonus tied to a spending requirement that must be fulfilled within a specified timeframe. Many consumers successfully meet these requirements by setting up autopay for recurring bills.
Bottom line
Applying for a credit card can indeed be intimidating, particularly for those seeking premium credit cards with valuable perks. By understanding the application process and what to expect next, you will hopefully feel less stressed and more optimistic about the chances of approval. If you’re not currently at the credit level needed for approval, the tips provided here can guide you in the right direction.
