Show up for your application like its a job interview.

Applying for a credit card can take less than 10 minutes, but to boost your chances of approval you should take your time getting ready. Yep, that means gathering the right documents, but it also means going back even further and assessing your income, expenses and any other debt you owe.

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Step 1. Check your credit rating

Your credit rating is the number value of your credit history, usually between 0 and 1200. Credit card providers will normally look for a rating over 600 to even consider you for a card. And, the lower the number, the more the bank will scrutinise everything else about you.

Potential credit card providers check your credit file when you apply for a credit card, so you need to make sure it shows you in a good light. You can apply for a copy of your credit file from a credit reporting agency to make sure it does not contain any errors – and so you know where you stand.

If your credit file does contain errors, you can request to have them corrected. If your credit file doesn’t look too good, you may want to improve your credit rating before you go ahead with your credit card application.

Step 2. Decrease your credit utilisation ratio

It’s not just your credit rating that’s under the microscope when you apply for a credit card. Your credit utilisation ratio will also be assessed. What is a credit utilisation ratio? This is basically how much credit you have available to you, in relation to how much credit you have used.

To calculate your ratio, divide the total current balances on your cards by their total limits. So, if you have two credit cards, each with a limit of $5,000, and you have a balance of $4,000 on both, your ratio is $8,000/$10,000 = 80%.

As a healthy ratio is generally thought to be around 30%, your ratio of 80% suggests you are currently struggling to repay your credit card balances. Potential credit card providers could see this as a red flag, and may choose not to approve any new credit applications in your name.

Before applying for a credit card, it can be a good idea to reduce your credit utilisation ratio as much as possible by paying down your balances.

Step 3. Understand your needs

With so many credit cards on the market, finding the right one can be tricky. To help you narrow your search, it helps to know what you need from a card. Then it’s simply a matter of matching a credit card to your needs.

If you want to pay down debt on an existing credit card, a card with a 0% balance transfer offer could be the way to go. Or, if you’re thinking about making a few big purchases and want to save on interest, perhaps a card with a 0% purchase offer would work for you.

If you want a moneysaving card, a low annual fee card or low rate card may be best. Or, if you tend to pay off the balance on your card month-to-month and want something in return for your spending, a rewards credit card or platinum card could give you what you need.

Step 4. Do your homework

Just as each credit card provider checks your background when you apply, doing some digging of your own could help you choose the right card and provider for you. Find out more about the provider, especially if it’s one you don’t know much about.

Check out what the provider has to offer, and whether it’s a good fit for your situation. At creditcard.com.au, we make this easy. For most credit card providers featured on our site, we provide some background info, alongside what cards they have to offer.

Step 5. Start comparing!

If there’s something we know a thing or two about, it’s credit card comparison. Once you’ve done some digging and worked out what you need from your credit card, it’s time to compare your credit card options.

Allowing you to compare features and fees, rewards programs and interest rates, creditcard.com.au makes comparing credit cards simple. Unsure what you should compare? Here is a run-down of the main factors to consider when you compare credit cards.

• Annual fees: This will tell you how much you pay out on the card each year, giving you an indication of the value of extras the card should offer.
• Interest: Check out the rates of interest on purchases, cash advances and balance transfers to find out whether this card is an affordable option.
• Rewards programs: Look at the rewards available, what you can earn for your spending, and what you can get for your points. Balance the value of these rewards against the annual fee you pay.
• Features: Find out what features are provided, such as insurance cover, airport lounge access, and concierge services. Again, balance the value of these features against what you pay in annual fees.
• Interest-free periods: Helping you to save on interest day-to-day, many cards offer interest-free periods on purchases.
• Additional cardholders: If you want to add additional cardholders to the account, check this is possible and how much it costs in annual fees.

Step 6. Check your eligibility

While some credit cards have fairly relaxed eligibility requirements, others are far more strict. Before you apply for a credit card, check the eligibility requirements for that card and make sure you meet every single one.

If you don’t meet a card’s eligibility requirements, your application may be declined. Is that really so bad? Quite simply, yes. Declined credit card applications are noted in your credit file for future credit providers to see. If you have a number of declined applications, potential credit providers could deem you a risk, to then decline your application and make your situation even worse.

In terms of credit card eligibility requirements, these usually include age, income, residential status and credit history.

Applying

Now you know what you need to do, what to look for in a card and how to compare your options. It’s more than likely you’ve found the credit card for you, so it’s time to apply.

Step 7. Organise your documents

When you apply for a credit card, most credit card providers will ask for certain documentation to back up your application. While the credit card application may only take 15 minutes, organising the required documentation can take longer.

So, to make the process go as smoothly as possible, find out what documents you will need and organise them in advance. Documents may include your driver’s license, proof of your residential status, and recent tax returns and payslips.

Step 8. Proof-read your application

Credit card applications ask a lot of you. Be sure to read over your answers to ensure they’re correct before completing your application. Incorrect info could delay your application, or in some cases, could result in your application being declined.

At this point, it’s also worth pointing out that you should always be truthful when applying for a credit card. For example, if you were to lie about your income, saying it is higher than it is, you would be committing fraud, which is punishable by law.

Step 9. Don’t make multiple credit card applications at once

If you find a number of credit cards that seem to suit your needs, it can be tempting to apply for all of them ‘just in case’. Bad idea. Each credit card application is noted on your credit file, so if potential providers see multiple applications at once, they may wonder why.

Applying for several credit cards at once may make it seem like you are desperate for credit and are in trouble financially. This makes you high risk, and more likely to have your application declined. With multiple declined credit card applications on your credit file, it will be even harder to get approved in the future.

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