The right way to apply for a credit card

If you’ve thought long and hard about your need to get a credit card, and have narrowed down your options after an exhaustive comparison of rates, fees and perks, then the next step in the process of getting a credit card is to actually apply for one.

Nowadays, most card providers let you do all this online, but applying for a credit card isn’t as easy as ticking a box. It can be a bit of a process, involving photo IDs, payslips, declaring your assets and so on.

Credit card companies have to take care when assessing your credit card application, as they need to make sure they’re giving the right card to the right person. So you can expect to have to do the following things when applying for a credit card.

You need to meet the eligibility requirements

As a general rule, successful credit card applicants need to be at least 18 years old and be either a citizen or a permanent resident of Australia, although there are a (limited) number of institutions that offer credit cards to temporary residents.

Credit Card issuers also have obligations that mean they need to lend responsibly So you will need to prove your capacity to handle the credit card based on owing the maximum limited, also show evidence of your income. It is likely that the credit card issuer will also undertake a credit check credit score requirements.

Depending on the card and the provider, you might need to be earning over a certain threshold per year and have a credit score above a certain number. People who have a lower income and/or have a poor credit score may struggle to be approved for some credit cards, particularly high-end rewards and premium credit cards, but it depends on who the card belongs to.  

You need to provide personal details

At this point it’s time to open up and share some personal information. No, you don’t need to tell them your deepest fears or hopes and dreams, just some basic details about yourself, mainly:

  • Your full name and date of birth
  • Your residential address, and any previous residential addresses (as well as how long you’ve lived there)
  • Contact details
  • The number of dependents you have
  • Your employment information and your occupation (are you self-employed? retired?)
  • Your income

They will normally ask you to provide ID, so make sure you’ve got a photo of your driver’s license/passport or a copy of your birth certificate or Medicare card on standby.

You need to show proof of income

Often just stating your income isn’t enough. Credit card application forms will likely ask for proof of income, which is usually the following:

  • Full-time or part time employees need some of their most recent payslips (often two), or bank statements showing your most recent salary deposits
  • New employees can show newly signed employment contracts
  • Self-employed people must show their most recent tax returns
  • Pensioners must show a statement from Centrelink confirming their entitlements, or their most recent bank statements showing government income credits
  • Retirees must show their most recent bank statements or annual investment statements
  • Those with other income types need to show things like signed tenant leases, bank statements of rental credits, deposit certificates, personal tax returns etc.

When applying online, they usually give you the chance to drop an attachment in, and even authorise your bank statements so that there is no paper involved.

You need to enter your financial information

Credit card providers need to consider your whole financial situation, not just your income. After all, someone with a high income can still lose money each week if they spend too much money at the pokies or have massive debts.  It’s all about do you have enough income that is available to handle the debt.

So don’t be surprised when you’re asked for a detailed list of your financial assets (savings, shares, valuable items you own) and liabilities (car loans, mortgages, other credit cards etc.). You may also have to give them an estimated monthly expense list, including major payments like rent, groceries, mortgage repayments, transport costs and so on.

Take some time to sit down and go through your bank statements to get all of this information together – this will make everything much easier.

It’s also a good idea to get your saving under control before you apply.  Doing this will increase the chances of being approved.

What not to do when applying for a credit card

One of the worst things you can do is lie, or just be inaccurate, on your credit card application. Failing to tell the bank about a large outstanding loan or a huge debt from other credit cards could lead to your application being rejected. Worse, if you’re somehow approved, and the bank finds out you lied later on, you could get done for credit fraud.

If you get rejected once, don’t go around applying for dozens of other credit cards immediately after. Each application goes on your credit score, and too many applications in a short space of time leaves will lower your overall credit score. And the lower the score, the harder you’ll find it to get approved.

But above all, don’t apply for a credit card that’s above your means. Look for one with a suitable credit limit, interest rate and fee structure – you don’t want to rack up credit card debt too easily.

Credit Simple

Credit Simple gives all Australians free access to their credit score, as well as their detailed credit report. See how your credit score compares by age, gender and community and gain valuable insights into what it all means.

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