How do you apply for a credit card? The application process explained
Whether you’re taking out your first credit card, or shopping around for a new card, the credit application process can feel intimidating. But it need not be if you do your research and follow some simple tips beforehand.
The good news is that nowadays you can easily apply for a credit card online, over the phone or in person at the bank. Once you’ve compared the current credit card offers, the application process is quick and straightforward.
To make the application process even faster, you can gather your personal information ahead of time, like proof of ID, payslips and bank statements, proof of employment and details of your income, assets and liabilities.
Here are some tips to help you increase your chances of credit approval, and to find a card that’s right for your needs.
- Compare your options carefully to choose the best credit card for your needs.
- Complete an application form (online, over the phone, or in person)
- If you gain conditional approval - you may need to provide information to verify your application e.g. identification documents, bank statements, payslips etc.
- If you gain full approval - your card will be posted to your address
- Activate your card and start using it!
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To do list: Before you apply for a credit card
Applying for a credit product without doing your due diligence can have adverse consequences to your credit history and credit score. Therefore, it’s crucial you get your ducks in a row before you apply.
Check your credit score
Request a free copy of your credit score to ensure you’re in a healthy financial position. Card issuers are more likely to approve applicants with credit scores in the ‘good’ to ‘excellent’ range. If your scores are lower than expected, you may want to grab a copy of your credit file and review it for any errors, or consider waiting to apply and boosting your credit score first.
Review the issuer’s eligibility criteria
Credit card issuers have eligibility criteria that you will need to meet before you may gain credit approval. This criteria is typically all about measuring your credit risk and ability to comfortably service repayments for a credit card.
As well as having a healthy credit score, credit card eligibility criteria may include:
- Meeting an income minimum – generally around $15,000 - $20,000 per annum.
- Being steadily employed. Having a part- or full-time job that you have held for 3-6 months (past the probation period) can make you appear more reliable to the card issuer.
- Being aged 18-years or older.
- Being an Australian citizen, Permanent Resident, or eligible Visa holder.
Pay off your existing debts
The card issuer will be assessing your ability to meet credit card repayments. Any existing debts you have may work to lower the amount of income you could otherwise direct to credit card repayments.
This is why it is generally advised that you repay your existing debts before you apply for a card, such as a car loan, or the outstanding balance of another credit card. However, if you are applying for a balance transfer credit card, then it will be presumed that you have existing debts.
Compare your options carefully
Before you apply for a credit card, you will want to ensure you’re choosing the best possible option for your spending habits and financial circumstances.
Understanding the way you spend, save, and your ability to repay debt will help to determine the features and type of card that is best for you. Consider using our Credit Card Guide to determine your Spending Profile, as this could offer insights into which type of credit card may suit you.
Be sure to also compare key credit card factors, such as:
- The interest rates
- Fees and costs, including application fees and annual fees
- Balance transfer offers
- Cash back offers
- Minimum repayments
- Number of interest-free days
- Rewards and perks, including affiliated rewards programs and/or airlines
- Protections and insurances
Consider using the RateCity credit card comparison tool to search for an option that may suit your Spending Profile.
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Documents and information needed for your credit card application
New customers who apply for a credit card are required to verify their identity, and will typically need to supply personal identification of at least the value of 100 points.
You may want to gather the following information before you submit your application to streamline the process:
- Proof of income – salaries or wages through two of your most recent payslips and/or a recent tax return
- Photo ID (your driver’s license, proof of age card or passport)
- Additional assets and income (such as a savings account or managed investments)
- Details of any existing loans, such as personal loans, a lease or other credit cards
- History of credit - a recognition of debt default or bankruptcy
Self-employed customers who apply for a credit card may also need to include additional documentation, such as years of tax returns or profit and loss statements, to prove their income.
How to apply for a credit card: simple steps to follow
- Confirm you are in a strong financial position to meet any eligibility criteria, such as being employed full time, or meeting minimum income requirements. Also ensure your credit scores are in a healthy range – ‘good’ to ‘excellent’ is considered ideal.
- Don’t be complacent with your childhood bank. Search and compare a range of credit card options to ensure you’re choosing one that best suits your financial needs.
- Gather your personal documentation ahead of time to make the application process as smooth as possible.
- Complete an application form (online, over the phone, or in person).
- If your application is conditionally approved, the credit provider may ask for extra information to verify your application e.g. identification documents, bank statements, payslips etc.
- When it is fully approved, your card will be posted to your address.
- Activate your card and start using it!
How easy is it to get a credit card?
For most Australians, there are no great barriers to applying for and getting approved for a credit card. Put simply, the ease at which you can get a credit card will depend on whether or not you suit a provider’s eligibility criteria.
The exact credit card application process may vary depending on the type of card and the credit company providing it, but generally it involves the steps listed above. Comparing credit cards to learn more about their eligibility criteria could give you a better idea of how easy it may be to see your credit card application approved.
What if your application is rejected?
It’s not uncommon that your credit card issuer may reject your application. For whatever reason, you may have missed one of the steps listed above, or your financial health may not be where you thought it was.
Unfortunately, a credit card rejection can be recorded on your credit file, and in turn, this may hurt your credit score. If this occurs, it may be worth waiting several weeks or months before applying for another credit card as you do not want to risk multiple card rejections at once.
In this time, you may want to again focus on boosting your application. This may involve:
- Getting a copy of your credit history and going through it with a fine-tooth comb for errors.
- Boosting your credit score to a higher category.
- Paying off any existing debts. This could even include your HECS/HELP payments in some instances.
- Waiting until you’ve been employed for a longer period – 12 months or more may be considered less risky.
- Grow a nest egg of savings to showcase a higher level of financial responsibility.
Keep in mind that if you’re applying for a higher-tier credit card, such as a black or platinum credit card, or a high-value rewards card, there may be much more strict eligibility criteria to meet. For example, some premium credit cards may involve you meeting income minimums of $100,000 or more.
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Product database updated 04 Mar, 2024