How to apply online for a credit card
MOST credit card providers now offer the ability to apply online, and many even offer an instant decision - an immediate response telling the applicant whether they were successful or not.
Speediness is good, but applying online also opens up access to many "internet only" deals too - either from dedicated card providers or from high street banks offering cards and deals that aren't available in branch.
Applying online therefore can bring a number of benefits: from a wider choice of cards, to a faster application process, to getting an immediate decision.
But how much quicker is it to apply online, and how instant is instant? And is all this haste a good idea financially?
We've got the answers.
First though, we'll have a look at how applying online works in general.
How do they work?
When an online credit card application is submitted the information is securely sent to the issuing bank or building society.
They then use simple credit scoring information - usually referring to one of the main credit reference companies - in conjunction with their stated criteria for that particular card, to determine whether they'll offer access to credit.
These credit reference agencies hold information about our financial histories, including details of current borrowing and how reliable we are making repayments.
They also keep track of more general information about an applicant's stability, such as whether we're on the electoral roll, how often we've moved, and the details of our previous addresses.
Anyone who's interested in getting a look at the information the credit agencies hold and how that can affect their credit history, can find out more here. We look more closely at how to improve those records, and future chances of being accepted for credit, in this feature.
Here's where the process can differ from provider to provider, or card to card. Unless the card provider specifies that we'll get an instant decision, we often won't get a decision from the bank or building society straight away.
In cases like this, we'll usually hear back from them within a few days to a week of submitting our details.
Where it's clearly stated that the provider is using an "instant decision" process, applicants will get a yes or no in seconds following the credit check.
Is it safe to apply online?
Online application forms are run from secure servers on a bank or building society's website.
The information entered on the form is securely encrypted, which means that when the data is sent it is scrambled and can only be read - or unscrambled - by the bank or building society that hosts the application form.
There's more on how to check if the connection is secure, and the information encrypted in our guide to online security here.
What is an instant decision?
An instant decision application (a.k.a. "instant approval" or "instant answer" application) is a fast-track online process that uses computer algorithms to make a quick decision on the applicant's suitability.
Many high street banks and major credit card issuers use this technology to fast-track online applications, including American Express, Royal Bank of Scotland and NatWest, Halifax, Tesco Bank, Barclaycard and Capital One.
How does it work?
Once the applicant has filled out their information and submitted the form, the application is processed pretty much immediately - and in most cases people will receive an automatic message telling them whether or not they've been accepted.
Because it's a computer doing the job of weighing up the good and bad credit reference indicators, it's especially important to look at the application criteria.
Think of it like this: when applying in person or by post there's room to argue and explain with the people working for the card provider, but a computer isn't as willing - or able - to take into account that extra information or our personal circumstances.
How long will it take to get the credit card?
Just as guaranteed credit cards don't exist, instant decisions don't mean instant access to credit.
At the very least, people who are accepted after making a fast-track application still have to wait for confirmation by post, or for the card itself to be posted to them.
It's becoming less common, but some card providers will want confirmation of the application in the form of a physical paper agreement that needs signing and sending back to them.
However, more and more credit card providers are happy to accept a form of electronic signature during the online application process.
This can be as simple as a single checkbox, or multiple tick boxes each confirming the applicant's agreement with the various different conditions and statements, and it means applicants no longer need to wait for the agreement to be sent out in the post to sign by hand.
Put simply, applicants doing this are agreeing to the terms and conditions during the application process - so if they're accepted, the company can send the new card out straight away.
While this is quicker, however, it does make it all the more important to check those terms and conditions during, or where possible, before applying.
The providers should make this fairly easy for us to do, by providing links to both a summary box (which explains in simple terms the rates of interest, fees and charges that come with the card) and the full terms and conditions; most offer them in downloadable form as well.
After checking we're happy with those, then signing and submitting the form, the time it takes to receive confirmation and acceptance (or a rejection), or the card itself, will vary, but a good rule of thumb is from seven to 10 working days, so allow up to two weeks from start to finish.
For more information on this, take a look at our FAQ on the subject, available here.
Can I apply online if I don't have a great credit history?
If our credit history isn't all it could be, that shouldn't put us off applying for a card online.
It's true that as it's a computer making the decision, there are two main types of online application: one for people with good credit histories, and one for those with little or no credit history, or a poor credit record.
People who fall into the latter category can look for cards specifically designed to help with credit building - there's more on how to find those below.
Plenty offer quick or instant decisions as well, so there's no need to get stressed waiting to find out if you've been accepted.
But before going that far, also have a look for cards that come with the ability to perform a "soft" search first - these give us a fairly good indication of whether we'll be accepted or not without leaving a trace on our credit files. There's more on why that's important below.
How important are instant decisions anyway?
Also bear in mind that while we've spoken plenty about the convenience of the quick and instant decision part of applying online, that shouldn't be the main criterion when choosing whether to apply for a particular credit card.
It's still much more important to compare credit cards by looking at their different features, as well as the benefits they offer.
What do lenders consider?
Whether applications are made online or not, lenders will refer to the credit reports compiled by one or more of the main reference agencies: Equifax, Experian or CallCredit.
As well as using them to check a person's financial history, they're looking to verify data such as the previous addresses an applicant provides.
Whatever the timetable for the application and decision, applicants must check they fulfil all the application criteria to be in with a chance of being accepted.
All credit cards require applicants to be resident in the UK and at least 18 years old - although some have a minimum age limit of 21, and others won't accept anyone under 25.
Applicants must also have some financial history in the UK - again the exact details and requirements depend on the card provider, but the absolute minimum is a current account and a regular income.
Before making an online credit card application, then, get as much of the following information to hand:
- Personal information: title, name and contact details.
- Home address: accommodation status (owned or rented), length of time at that address and the postcode.
- Previous address: information will be needed if the current address has been changed in the past three years; one or two moves should be okay, but stability is an important factor.
- Employment details: work status, job title, employer details and contact information. The steadier the job the better; those who've worked for just one or two employers in the past five or so years will be looked upon more favourably. Again, it's about stability.
- Finances: salary information and current bank account details are significant, as lenders must determine if the credit is affordable, and how much they're willing to extend it. As with work and home, having stayed with the same bank for a good length of time can work in applicant's favour.
- Credit scoring: has the applicant had any credit before; if so, how much and did they pay it back on time? This can also cover non-credit borrowing, such as mobile phone contracts and bank overdrafts.
- Credit to debt ratio (and available credit): as well as how much credit an applicant has used, lenders may also look at how much available credit they currently have - that is, whether they already have a lot available, even if they aren't in debt.
- Past credit borrowing behaviour: whether people have repaid credit on time, the types of transactions they've made, whether they've used promotional offers, what past or current credit limits they have, whether they've made cash withdrawals and so on. For more details on what information lenders share, see this article.
The last three are more difficult for applicants to provide, but the details will be in their credit files. This information is just as important - if not more so - to the lender as knowing there's a steady income and that a potential customer hasn't moved around too much.
So, as we mentioned above, it can sometimes be worth us obtaining a copy of our credit report before applying for fresh credit.
As well as giving a better idea of what potential lenders are going to see, it's the only way to know for sure if the file contains any mistakes, and therefore to be able to fix them - which could have a large bearing on our chances of being accepted.
Should I make multiple applications?
Being able to apply online makes the process so much simpler that making multiple applications is more attractive than ever.
Then there are the people who aren't sure whether or not they'll be accepted, so they hedge their bets by making several applications in a very short period of time.
But doing so can seriously damage a credit rating.
Unless a provider offers a "soft search" facility, every application will leave some kind of trace on a credit file - and therefore be visible to other lenders when they make their credit searches.
Multiple applications and searches are red flags for lenders - they suggest the applicant is desperate for cash, or that they're not sure they're going to be accepted. Neither of these is attractive to a lender, so they're more likely to result in an application being rejected.
Those who do have their application rejected should try to find out why they were refused. Both the search and rejection will stay on their file for up to 12 months - but so too will evidence that we're improving our financial situation, or corrections to errors.
In any case, they should wait at least three months before making another application to prevent compounding any damage already done.
As mentioned above, some credit card providers now offer potential applicants the chance to do a "soft application" - basically offering a quick yes or no decision without going through the full application process.
Unlike the actual application, these checks make use of the "soft search", also known as a "quotation search" - which does a basic credit verification check but doesn't leave a trace on the credit file.
If we look at our file, they'll be visible to us - look for terms like "quotation", "general insurance, " and "generic check" - but they won't show up when other providers check our records.
But while they don't leave a visible trace on an applicant's credit record, the results they provide aren't definitive - because they don't make use of the full credit check.
They can therefore offer a good idea of the possibility of acceptance, but a standard credit search could still provide a different outcome.
The other drawback is that quotation searches still aren't that widely available. We've more information on the lenders who do offer them in this article.