Applying for a credit card online is easier than ever, but you should be aware of a risk. Find out how it can hurt your credit score and what you can do to avoid it.
When you could only get a credit card by going to your bank in person, those days are gone for good. Even applying for a card by mail is pretty old-fashioned these days. It's much easier and faster to apply online, and in many cases, you'll know right away if your application is accepted or not. Online credit card applications are convenient, but they can be too easy, which can hurt your credit score.
When you're given the chance to apply for a credit card online, it's not always clear what kind of customer the card issuer is hoping to get. Each type of card is for people who meet certain criteria, such as having a certain minimum income, being over a certain age, or having a certain credit score.
In the past, your bank manager or financial advisor would only offer you cards that you had a good chance of getting. When you apply online, however, you're the only one who can make sure the card is right for you. And because applying online is so easy, it can be tempting to just apply anyway and see if you're accepted. This could be a very bad idea.
Your credit file will show that you were turned down for a credit card or other loan every time. If you have a lot of rejections on your file and not many acceptances, this can actually make your credit rating look worse, making it even harder to get an application approved. This is obviously not what you want to happen, so how can you stop it?
The first step is to look closely at the cards that have the features you want, such as a 0% balance transfer deal, a low APR or interest rate, or a great rewards programme. There are a lot of sites on the Internet that let you compare credit cards, which makes this a lot easier than it used to be.
Once you have a short list of cards to apply for, read the fine print of the one you think is best to make sure there isn't something like a minimum salary that would make it impossible for you to be approved. If everything seems fine, take an honest look at your finances and past applications and decide if you think you have a good chance of being approved.
After that, you should submit your application, and you should only apply for one card at a time. If your application is turned down, check to see if the same card company has a similar card with a higher interest rate. The requirements for getting that card may be less strict, so it may be worth applying for it.
You could also try to get a similar card from a different card company. Each company has its own way of deciding whether or not to accept an application, so you might have better luck somewhere else. Don't keep applying for similar cards from the same issuer, because the acceptance criteria will be pretty much the same and you'll just keep getting turned down, which will hurt your credit score. At this point, you don't have much choice but to lower your expectations and apply for a less desirable card, even if it means paying more for the convenience of having a credit card.
