Credit card applications can be daunting. On the one hand, you need to consider the eligibility requirements for the card. Then you have to gather all the necessary you’ll need.
Oh, and don’t forget to consider your application’s impact on your credit score. Also, what if you get rejected? What can that do to you score?
Despite all the things you should be thinking about, you don’t need to fret. Once you gain a basic understanding, credit card applications can be a straightforward process.
In this post, we cover all things regarding credit card applications, specifically as they apply to what to do before, during and after your application. Consider it the ultimate guide to credit card applications, if you will.
Let’s get started!
- Things to consider before your credit card application
- What you’ll need for a credit card application
- How to apply for a credit card
- What to do after your credit card application
- Final thoughts on credit card applications
- Frequently asked questions about credit card applications
Things to consider before your credit card application
There are hundreds, if not thousands, of credit cards on the Canadian market. Before you apply to many cards, make an educated decision on which one to apply for. This way, you can avoid getting one that doesn’t fully suit your needs or, even worse, getting rejected.
Before starting a credit card application, I recommend you consider things such as:
- The card’s interest rate for purchases, cash advances and balance transfers
- The annual and/or monthly fee
- Rewards, cash-back and discount perks
- Required income for eligibility
- The length of the grace period
- Insurance (travel, car rental, and other)
- The fee schedule for things such as foreign exchange (FX), over-limit, and automated teller machine (ATM) withdrawals
- Cost for additional cards/authorized users
- User experience, company values and customer service
If you don’t know where to start in the plethora of available options, a credit card comparison tool might be just what you need!
What you’ll need for a credit card application
Once the decision is made, it is time to gather the necessary documents to complete your application.
Before we dive into the required documents, let’s first get the basics out of the way.
To be eligible for any credit card in Canada, you must fulfil all of the following criteria:
- Being a Canadian resident (that is, having citizenship, permanent residency, or refugee status in Canada)
- Attained the age of majority in your province or territory of residence
- Having a Canadian credit file (note: some financial institutions may also require that you have not declared bankruptcy in the last seven years).
If you went “check,” “check,” and “check” when going through that list, that’s awesome. The next step is proving that you meet these requirements by providing government-issued identification and consenting to a hard credit check.
Beyond these prerequisites, some required documents for your credit card application may include:
- Employment letters
- Salary slips
- A list of the other credit cards you have,
- A summary of your assets and liabilities.
Each lender may have slightly different application processes based on its risk profile and internal procedures. To apply for a Scotiabank credit card or loan, for instance, you need to provide the following.
Please also note that this is just a guide. I recommend reading up on the requirements for the specific credit card you’re applying for before you start to avoid any mishaps.
Pay no annual fee for the first year, including additional cards*.
- Annual fee: $120
- Interest rate on purchases: 19.99
- Interest rate on cash advances: 22.99
How to apply for a credit card
Depending on your chosen lender/financial institution, there may be several different ways you can apply for a credit card. Let’s briefly go over each option.
In-person (branch) applications
In-person applications are usually available with Canada’s traditional, big-five banks (TD, RBC, BMO, CIBC and Scotiabank) and credit unions. This is primarily because these institutions have branches for in-person banking, whereas digital-only banks and less traditional lenders may not.
If you are applying for your new credit card in person, do your research before walking into the branch. If you don’t have the required documents or information, you may have to return at a later date.
In-person applications may be a convenient way to apply for those who don’t consider themselves very tech-savvy or have questions about the application process. This way, the teller will be able to walk you through the process, answer your questions and submit the application for you.
You may also have the option to apply for your credit card over the phone. In such applications, the teller will walk you through the process and confirm your identity before starting the application. They will then ask you for your personal details, including your address, social insurance number (SIN) and employment status.
When you apply for a credit card over the phone, you may have to send certain documents later on. This is sent to the lender either physically or electronically. It might be things like copies of your passport or employment letters.
Applying for a credit card online is usually quick and easy, taking somewhere between 15 to 60 minutes in total. Some credit card providers, such as American Express, also make it a point to give you a decision on your application in a matter of minutes, simplifying and speeding up the process even further (see below!)
Online credit card applications require you to input all of your details on your own. If you have questions or are stuck, you can hop on a call with a customer service representative for clarification.
What to do after your credit card application
Hearing back on your credit card application may take anywhere from just a few minutes to 30 days. On average, however, most applications take about one week to finalize.
If your credit card application has been approved
If your credit card application has been approved, congratulations! The next steps are to wait a few days to receive your new credit card in the mail. The last to do is to activate it.
You can activate your new credit card by calling the toll-free number on its back or logging onto your digital banking. Once you do this, you’re ready to go!
PS: don’t forget that most institutions will require you to insert the card into a point-of-sale (POS) machine the first two times you use it. If the card has contactless payment capability, it will usually activate after the third transaction.
If your credit card application has been denied
But what happens if your application is denied? First, don’t fret. While there may be several different reasons as to why this happened, it is likely that you still have other options.
If the financial institution hasn’t already given you a reason for their rejection, you can contact them to learn more. If the issue was your credit score, I recommend that you explore credit card options for rebuilding your credit score. Otherwise, consider options that accommodate lower annual incomes or more limited credit histories.
Final thoughts on credit card applications
There are approximately four steps to a credit card application: choosing the appropriate card, gathering your documents, completing the application and then taking the necessary post-application steps based on the lender’s decision.
Once you become familiar with how credit card applications work and the different types of credit cards available to you as a consumer, this is a relatively straightforward process. We just recommend that you carefully minimize the effect on your credit score, as each hard credit inquiry that results from an application can lower your credit score by a few points.
Frequently asked questions about credit card applications
If your credit card application is not yet processed, you may have the option to cancel it online or by calling a customer service representative at your given lender.
You cannot, however, cancel your credit card application after you’ve been approved. If you do not want the credit card you have applied for, you will have to cancel the credit card itself.
No, you cannot include other people’s income on your credit card application, even if they are your parents and will support you in paying your statement balances.
If your parents pay you a consistent monthly allowance, you can include this money as part of your income based on the lender’s discretion.
You will need government-issued identification, your social insurance number, proof of income and a summary of your assets and liabilities to apply for a credit card. It is also necessary that you consent to a credit check during the application process.
Credit card applications themselves do not affect your credit score, but the hard credit check you consent to in your application does. Generally, this impact is quite low (only a few points), and you can recover from it by upkeeping your credit-friendly habits over the following months (as you always should be!)
Suppose you are, however, consistently applying for new credit cards (or other types of credit, such as loans or mortgages) for whatever reason. In that case, the cumulative effect on your credit score will be more prominent.
There is no prescribed amount of time that you should wait between credit card applications. While it is better that you wait as long as you can, we recommend that you do not apply for more than one credit card within the span of 90 days. If you can hold off, consider waiting about six months.
A traditional credit card application results in a hard credit inquiry. Prepaid or secured credit cards, on the other hand, usually only require a soft inquiry. Soft credit inquiries are less detrimental to your credit score.
You may be better off putting “student” on your application as this may give you eligibility for student credit cards with more preferable terms, a lowered annual income requirement and fewer fees. At the end of the day, however, the decision is up to you.
Any direct payments you receive (and don’t have to pay back) can count as income for credit card applications. Your income sources may include employment or self-employment earnings, investment income, government or pension payments, income from a spouse or partner, allowances, scholarships, grants, bursaries, or trust fund payouts.
Your income may be in the form of cash, direct deposits or cheques. Borrowed money (such as lines of credit or student loans) does not count as income for credit card applications.
There can be many different reasons why your credit card application was declined. However, some common reasons include having a low credit score, not meeting the annual income requirement, having an unstable income, having limited credit history (common for newcomers or youth), or having a high outstanding credit balance.
If you’re unsure why your application got declined, I recommend reaching out to the lender to learn more. This way, you can take the appropriate steps to remedy the situation or look for more suitable options.
Getting rejected for a credit card does not negatively affect your credit score. What does affect it, however, is the hard credit inquiry done by the lender in the application process.
If you’re rejected for a credit card and immediately apply for another through a different lender, the effects of multiple inquiries can add up. As such, we recommend waiting at least 90 days between applications, if not more.
The credit inquiry that results from a credit card application can stay on your credit report for about two years. The negative effect on your score, however, will be negligible after one year.
The application process for a new credit card can take between 15 to 60 minutes, while the decision process afterwards may take a few minutes to a few weeks.
A decision on your credit card application may take up to 30 days. While the long turnaround time may be related to the status of your application, the lender may also have an overwhelming number of applicants or may be experiencing other issues on their end.
After 30 days, you may consider reaching out to the lender regarding the status of your application.
There is no magic number for credit card applications. You are free to apply for and have as many credit cards as you like.
It is, however, a good idea to keep in mind that the credit inquiries that result from credit card applications hurt your credit score. As such, more than one application within the span of a few weeks may be detrimental to your credit score and be considered “too many.”
We highly, highly recommend that you do not lie on your credit card application, as doing so may result in serious consequences that hinder your ability to get credit again for a long time. In addition, lying on your credit card application may be considered fraud and potentially result in fines or jail time.