Apply Online for a Credit Card: What you need to get started
When applying for a credit card online there are a few things you’ll need to prepare so that your application process is a smooth one.
An application for a credit card can be the first step to more financial freedom.
A successful credit card application is the start to building a good credit history which can help if you eventually apply for a home loan or mortgage.
Not all credit card applications are approved
When applying for credit, be it any sort of credit for instance a credit card, a personal loan, a car loan or home loan, the financial institution needs to analyse the risk they are taking when, and if, they decide to lend you money.
However, not all credit card applications are approved. So, to give yourself the best chance of being approved you need to be prepared for the types of questions they will ask you on the credit card application form.
If the institution needs to double check and verify all the information (or lack of information) that you have supplied then your credit card application will likely take longer than usual to be processed, meaning you won’t get your new credit card as quickly as you would have anticipated, or perhaps you’ll be declined due to lack of comprehensive information, or conflicting information.
Don’t know which credit card you want yet? Here's a guide on how to work out which credit card is best .
What you will need
The financial institution or lender will want to firstly know the basics like your personal details: name, age, date of birth and address, and maybe your previous addresses too. You cannot apply for credit if you are under 18 years of age.
Your identity needs to be verified so you might need to provide your driver’s license number, passport details and or your Medicare number, as well as proof of your address like a mobile phone or electricity bill that has been addressed to where you live.
Even if you are applying for a credit card with your current bank, you will usually still need to provide identification and proof of income.
Providing proof that you have an income is important to the lender as well as details regarding how many dependants you have, so they can assess how capable you are of paying back the loan and any outstanding debts.
To provide proof of income you might be asked to provide up to three wage slips, your last group certificate, or a letter from your employer. Or you might be asked to provide your tax file number and details of your latest tax return.
You should also be prepared with any Centrelink records or Family Court agreements if you think this applies to you. If you are a student, remember HECS or HELP is a form debt so you might need details of that too to complete the application.
As well as looking at your income, the bank will want to know information about your general expenses and any other debts you already have to service. What you need to spend on rent, transport, communication, bills, children, home loans and car loans for example - are all important factors that the bank needs to know in order to make a clear assessment of your ability to take on debt and pay it back.
If you are self-employed, you should still be eligible for credit card offers if you can provide financial statements showing your income or tax returns from the past two years. The requirements may differ depending on your credit card provider.
When all your details are gathered about your income, outgoings, debts and dependants, etc. your credit card application is assessed – sometimes on the spot – by the financial institution.
Each financial institution has a different risk assessment process when it comes to lending, so your credit card application could be rejected from one institution but approved by another, depending on how risk taking or risk averse they happen to be.
So to recap, here’s a summary of what you should be prepared to be asked for when you apply online for a credit card:
- Identification; drivers license, passport or Medicare card
- Proof of current and past addresses
- Employment information, current and past
- Annual salary details or latest group certificate
- Tax file number or latest tax return
- Name and details of current bank accounts, credit cards or loans with the same or other banking institutions
- If self employed, details about profits and loss of your business
If you are new to credit card applications or applying for a credit card online. it is important to be organised before you get started. Understanding the process for credit card approvals (and rejection) could be your first step towards your new financial freedom.
Don’t apply for multiple credit cards at once
If you are rejected for a credit card from one bank, it’s not a good idea then keep applying for credit cards with multiple different financial institutions to try your luck in other places.
Why? Because every time you apply for credit it is recorded in a central database called a credit file. This might sound a bit big brother, but you can request a copy of your credit file at any time if you’d like to using Veda.
It doesn’t look good on your credit file to apply for credit too many times within a small time frame, because it looks like you are desperate for credit and or you keep getting rejected for credit. Financial institutions are permitted access to your credit file when they are assessing you for credit card applications.
So, if you’ve recently been approved for a car loan, and you already have two credit cards, and you have a home loan too, you might get declined for a new credit card application not because you don’t earn enough but maybe because you have applied for credit too many times in the past 12-24 months.
If you have ever been bankrupt before or you have a history of bad debts, for instance you’ve waited too long to pay a parking fine or an electricity bill, then that too could get noted on your credit history and serve to disadvantage you when you apply for a credit card in the future.
It’s never a good idea to let unpaid bills go on too long for this very reason. If your overdue bills are sent to an in independent debt collection agency that too could be especially bad for your credit history.
Do not lie on your credit card application
Falsifying any of your details on a credit card application could lead to serious outcomes. For one, should the bank cross reference your details and find out about the misinformation, not only will your application be rejected but you may never be considered for any type of financial product with that provider ever again.
In extreme cases you run the risk of your details being passed to the authorities for questioning.
What if my credit card application is declined?
Financial institutions will not disclose why your credit card application is declined, if that happens to be your outcome. However at a guess it could be not just one thing but a multitude of reasons that leads to their overall assessment that you are too much of a risk to lead money too.
Some reasons for credit card rejection could be; not enough income, too much debt already, too many expenses, applied for credit too many times recently, history of bad debts or bankruptcy.
Once a bank has made a decision it’s usually final. You could try talking to one of their consultants to see if your application can be re-assessed if you have any new evidence that might help your case, like proof of other income for example, although you might have to start the process all over again if that’s the case.
The best thing to do if you have been rejected for credit is realise that perhaps you need to clean up your credit act, and that maybe a new credit card will not help you get out of your debt troubles but only make them worse.
To clean up your credit history and improve your credit score you should ensure you always pay your debts on time, and in full. Not always easy for everyone, so maybe you need to take on a second job to get your finances under control, or, stop spending beyond your means. You might have to move to a place with lower rent, sell your car, or sell some of your appliances and old things to get back on track.
If you know how much you earn verses how much you need to spend on necessary things, then work out the difference and start a savings plan for what’s left over. A strict personal budget might be what you need to employ – even if only for a short amount of time – to help you get back on top of the debt cycle.