Barry Choi
Applying for a credit card should be a pretty straightforward process. You just fill out the application and then wait for the card to arrive, right? While this is technically true, it doesn’t mean you should sign up for the first card you come across. Before you apply, it’s important to consider many factors, such as your credit score, what kind of card you want, and your odds of being approved.
What type of credit card do you want?
There may be dozens of cards out there, but generally speaking, they fall into three main types of credit cards:
- Cards for no/bad credit: These cards are designed for people who want to establish or improve their credit scores.
- Low-interest cards: If you’re carrying any debt, a low-interest card can help reduce your payments.
Balance transfer credit cards also offer no- or low-interest to aid paying off your debt transferred from another credit card. - Rewards cards: If you manage your spending well, you can use a rewards card to earn benefits with every purchase.
It’s important to consider what kind of card you need before you apply. It doesn’t make any sense to apply for a travel rewards credit card if you don’t like to travel. If you have bad credit, applying for anything other than a secured card means you’ll likely be declined.
Consider your credit score and income
When applying for a credit card, you need to be realistic about what you’ll qualify for. In most cases, you need a good credit score if you want to be eligible for an unsecured credit card.
You can check your credit score directly through Equifax and TransUnion, the two credit bureaus in Canada. If your score is at least 660, which is considered a good credit score, you may be more likely to be approved.
The other thing to consider is your annual income. The better the credit card you’re applying for, the higher income you’ll need to qualify. For example, Mastercard offers three tiers of credit cards with the following income requirements:
- Basic: $0 to $12,000 minimum annual personal income
- World: $60,000 personal or $100,000 household annual income
- World Elite: $80,000 personal or $150,000 household annual income
With your credit score and income in mind, you can start looking at cards that might be suitable for you.
» MORE: How old do you need to be to get a credit card?
Best Credit Cards in Canada
Compare all different credit cards side-by-side and find out the best card that will reward you with special perks and benefits
What happens when you apply for a credit card
When you apply for a credit card, the issuer will request to review your credit report. That request is recorded as a hard inquiry, which generally results in your credit score dropping 10 points. While this drop may worry some people, your score will eventually go back up if you pay your bills on time. That said, applying for multiple credit cards simultaneously could be troubling as your credit report would show numerous credit inquiries. Some lenders, including mortgage providers, might be concerned about you trying to access a lot of credit in a short period.
Applying for a new credit card can sometimes help boost your credit score. For example, if you have a credit card with a $3,000 limit and your typical balance is $1,500, you would have a credit utilization ratio of 50%. If you applied for a new card and were approved for a limit of $6,000, you would now have a total of $9,000 in credit available. As a result, your utilization ratio would drop below 30%, to 17%. This is significant because your utilization ratio is one of the major factors that determine your credit score.
Applying for a credit card
Once you’ve decided what kind of credit card you might qualify for based on your needs, credit score, and income, the rest of the process is easy. It’s worth noting that you need to be truthful on your application, or your card could be cancelled even after you’re approved. Follow these steps to apply for a new credit card.
- Research options that might match your needs, credit score, and income
- Compare the fees, interest rates, sign-up bonuses, rewards, and additional benefits
- Choose the best option for you
- Fill out your application online or at your financial institution
While you can apply for more than one credit card at a time, we don’t recommend filling out multiple applications in a short period, as it could affect your credit score. Ideally, you should wait about six months between credit card applications.
Once approved, you’ll usually have your card in hand within 14 business days, though it depends on your issuer and the mail. If your application is declined, you could call the financial institution to find out what happened. In some cases, they may not have been able to verify your information. Confirming a few details could help you get instantly approved.
When your card arrives, activate and sign it right away — until you do, it’s a useless piece of plastic. The activation process will usually involve setting up security info, such as your PIN and login details.
As you start using your new credit card, remember to spend responsibly, manage your payments, and keep an eye out on the common credit card mistakes so you don’t end up in debt.
About the Author
How Long Should I Wait Between Credit Card Applications?
Waiting about six months between credit card applications can increase your chances of getting approved. Apply more frequently than that, and issuers may see you as a riskier bet and reject your application. The exception? If you have excellent credit, a high income and a history of on-time payments, you can probably apply for new […]
Kimberly Palmer
Lindsay Konsko
How Do Credit Cards Work in Canada?
Credit cards are part of daily life for many Canadians. You can use them to make purchases, and they can help you build credit and earn rewards. Credit cards are a convenient financial tool but can land you in debt if used irresponsibly. Understanding how credit cards work and what options are available to you […]
Shannon Terrell
What Are the Different Types of Credit Cards?
For anyone new to credit cards, deciding which card to apply for can be a little overwhelming because of the number of options. And each one has different requirements, perks, benefits, and fees, so where do you even begin? Start by thinking about the type of credit card that will match your needs and lifestyle. […]
Hannah Logan
How to Get a Credit Card in Canada When You Have Bad Credit
Your credit score is one of the most significant pieces of information that affect your financial life. With a good credit score, you’ll likely have no problem getting access to credit cards, loans or a mortgage. However, if you’ve made some financial mistakes in the past, your credit score could be low, which might limit […]