3 Mistakes to Avoid Before Applying for a Credit Card

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1. Not Getting Pre-Qualified

If you can get pre-qualified, make sure to do it! Credit card issuers such as American Express, Capital One, and Discover offer a pre-qualification process for their credit cards. I have pre-qualified for a credit card from each of those issuers. The pre-qualification process typically includes filling out a form with your basic personal information, which is then used to do a soft inquiry of your credit report to determine if you pre-qualify for the credit card. Pre-qualification is a basic review of your creditworthiness and does not guarantee that you will get the credit card when you apply for it.

Regarding pre-qualification vs. pre-approved, these words are used interchangeably but at times they differ. Pre-qualified typically means that a basic review has been done on your credit report to determine your creditworthiness while pre-approved typically refers to you being pre-screened by issuers due to you already being pre-qualified, leading to a more direct (and sometimes more rewarding) offer on a credit card. Just like being pre-qualified, there is no 100% guarantee that you will get the credit card that you want because you have been pre-approved. At the end of the day, it is important to get pre-qualified so that you do not make the mistake of wasting your time and being denied for a credit card.

2. Not Reading the Terms and Conditions

Yes, that boring document that states interest rates, interest charges, fees, the cardmember agreement, and other information you may not consider important when they are very much important. You should read that document and understand what you are getting into before applying for a credit card. The terms and conditions of a credit card can be intimidating with the language that they use, but I can ensure you that they make sense once you sit down for 30 minutes and read. 30 minutes? Yes, 30 minutes. Remember, you are looking to apply for a line of credit that will affect your credit report and score.

Credit Karma has a useful guide regarding the terminology of the terms and conditions of credit cards. It breaks down the meaning of phrases such as annual percentage rate (APR), balance transfer, and cash advance. Being able to understand phrases like those will assist in you realizing if the credit card you thought you wanted is the card truly for you. You do not want to end up in the position of applying for a credit card that ends up hurting your credit report and score in the future because you did not fully read through the terms and conditions.

3. Lying

Do not even think about doing this. Get that thought out of your mind completely. When applying for a credit card, or anything in life, you should always be honest. Lying about items on your credit card application such as your income, account balances, and housing expenses may allow you to get more credit cards in the short-term, but the long-term consequences are not worth it. Do you want to be charged with credit card fraud? Do you want to be hit by significant financial penalties and/or prison time? I hope your answer is no to these questions because I know mines is.

There is no need to lie. Yes, you can get denied for a credit card even if you feel like you check all the boxes for it. You know what you should do? Move on. Re-evaluate your current credit situation, conduct more research, and then find that credit card that you know that you will be able to get approved for. If you think you should have been approved for a credit card you were denied for, credit card issuers have reconsideration lines you can contact regarding the denial. Lying should never be a solution for anything you do in life. Being honest is an important aspect of your financial success.

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