How to apply for a credit card in Australia: your ultimate guide to applying for credit successfully

Filling in a credit card application form isn’t always difficult, but that doesn’t mean it’s always easy to get approval.

Here’s a few steps you can take which could help maximise your chances of getting a credit card that suits your needs.

If your credit card application is declined, you may get a ‘black mark’ on your credit history, and it could make it harder to apply for future credit, such as a home loan or car loan. So, it’s important to take the time to get your application right the first time. A step to success is ensuring you apply for a card where you feel you’ve got a good chance of approval.

How do you know if you’ve got a good chance of being approved? Well, checking your credit score is one indicator, which is a number that signals to potential lenders whether you could be a creditworthy borrower. The score is based on your credit history, such as any debts or missed payments.

Lenders use your credit score (or credit rating) to help gauge whether you’re trustworthy and therefore whether you’re likely to make your repayments and interest payments on time. Your credit score will be calculated based on information recorded in your credit report or history — information which can include:

• The amount of money you’ve borrowed
• The number of loans and credit cards you’ve applied for and over what period of time
• Whether you’ve applied to increase the credit limit on a credit card
• Whether you’ve missed compulsory loan repayments
• Information about court judgements, bankruptcy or personal insolvency, if relevant

There are three main credit reporting bodies in Australia who use different ranges and algorithms to record your credit score. The three credit reporting bodies are Equifax, illion and Experian. You may be able to find out what your credit score is for free from some credit reporting agencies or an online credit score provider, in just a few minutes.

If you’ve got a good credit score, you may have a higher chance of having your loan application approved. If your score is low, it may make it more difficult to gain approval. But the good news is that there are things you can do to help keep your credit score in the green, such as:

• Have any errors on your credit file corrected
• Pay all bills on time (this includes rent, home loan, any bills for credit cards or loans you already have, and even utility bills)
• If you feel you’re going to have trouble making a repayment, talk to your credit provider and organise a payment plan
• Avoid applying for too much credit in a short space of time, such as credit card churning

Once you’re satisfied you’ve got a good credit score, it’s a good idea to carefully consider how much credit to apply for. After all, it would be a shame to have a credit card application declined because you asked for too high a limit. (Some lenders will just offer you a lower limit if you apply for too much credit, but why risk it?)

We’ve put together a great guide to help you figure out how to choose a credit limit to apply for. But briefly, ensure the amount you want to apply for one go is above the card’s minimum and below its maximum, and that you can afford to repay that much credit in one go.

No two credit cards are made equal. However, there are several groups of credit cards that have slightly different features and conditions, including:

• Balance transfer credit cards
• Frequent flyer credit cards
• Cashback credit cards
• Rewards credit cards
• Low-interest credit cards
• Low-fee credit cards
• Interest-free (0%-purchase credit cards)

So, at this point in the process, it can help to pick the types of credit cards that you feel work best for you and your lifestyle. Otherwise, you could be left comparing a wider range of credit cards.

As an example, if you do a lot of travelling, you might prefer a frequent flyer card that could provide benefits when you travel and help you save up for future trips. Some frequent flyer cards offer travel perks like airport lounge access, priority boarding and baggage check-in, and travel insurance cover.

Complimentary travel insurance may cover a range of issues that could arise on a holiday or business trip, so it can be quite a valuable perk. However, it’s important to check the Product Disclosure Statement of the policy to ensure you understand the inclusions and exclusions of the policy.

As another example, if you’re hoping to get a credit card to use for emergencies only, you might prefer a low-fee card that charges low or no account-keeping fees. Paying an annual or monthly fee for something you rarely use might be a bitter pill to swallow!

Lifestyle factors you may want to consider when choosing a class of credit card could include:

• Cashflow — If your income and expenses fluctuate a lot, you might be able to repay your balance in full quickly only some of the time, and thus a low interest rate might be something you value more.
• Hobbies — Frequent flyer credit cards are an example of a class of cards that support a particular hobby. Other kinds of rewards cards can also be used to support hobbies by providing you with rewards points you can redeem for other products and services.
• Card purpose — The reason you want a card could heavily impact the type of card you get. If you want a card for emergencies, you may prefer a card that’ll only charge you on the few occasions you use it. If you’re applying for a card and hoping it will help build a good credit score, you might also prefer a low-fee or low-interest card.

Take a look at our credit card comparison for more information about a range of different credit cards, or check out a few options below to help get you started.

Banks and other lenders generally offer credit cards as another way to help generate revenue. So, it’s worth keeping this in mind when reviewing the terms and conditions of each card, as they’ll include information about fees and charges which could come about based on your use of the card.

How? Well, lenders charge interest based on how much credit you’ve used and are yet to repay (your loan balance). They also charge a range of fees, such as some or all of the following:

• Monthly or annual fee
• Late payment fee
• Cash advance fee
• Balance transfer fee

Because these fees are what most people concentrate on, many lenders may entice new customers by offering special deals that waive fees for a period of time (e.g. no account fees for the first 12 months) or charge a lower rate of interest for a special introductory period (e.g. interest-free for 12 months).

Sometimes, you have to dig into the product details and terms and conditions to better understand what fees and charges apply after the introductory period ends. But it’s well worth going to the effort because a credit card that looks really attractive initially might end up being far more expensive than other options once special deals expire.

That doesn’t mean those cards don’t have their place, though. In fact, they could be just the thing you need if you’re getting a credit card to help you pay for an expensive product or service you’ll only need once. Examples could include a wedding, holiday, surgery or home renovations. In such a circumstance, you might only have the card for a year or so while you pay back the money you borrowed.

So, a higher than normal standard interest rate or more expensive standard fee structure may not faze you as long as you can repay your loan and close your account by the time those expenses kick in at the end of the introductory period. A card with an attractive introductory offer might be suitable for that kind of situation. However, if this is the case it can be a good idea to compare against other loan options, such as personal loans, to see if there is a cheaper way to borrow the funds.

Now you’re ready to compare credit cards that belong to the class of card you’ve chosen. To compare cards, you can compare their interest rates and fees, including any introductory and standard fees and rates. (Don’t forget to check you meet all the eligibility and lending criteria too.) But there are so many other things to take into consideration.

For instance, if the cards you’re considering aren’t on the same credit card payment network (e.g. Visa, MasterCard, Amex and Diners Club are the most well known in Australia), there may be an important difference in the number of locations you use the cards.

If you feel strongly about the environment or another worthy cause, you might prefer to pick a credit card offering from a lender that better supports that cause.

For a guide to comparing credit cards, take a look at our credit card comparison page, as well as the class-specific page that relates to the type of card you’d like to get:

• Compare cashback credit cards
• Compare rewards credit cards
• Compare business credit cards
• Compare frequent flyer credit cards
• Compare no-annual-fee credit cards
• Compare low-interest-rate credit cards
• Compare 0%-purchase credit cards
• Compare balance transfer credit cards

Once you’ve picked the exact card and credit limit you’d like to apply for, filling in the credit card application can be fairly straightforward. As with most other credit products, you’ll need to complete the (usually online) application form, provide the required documents and then sign the contract your lender provides when they offer you a card.

These are the documents you’ll likely have to provide as part of your application:

• Identification that confirms your name, date of birth, Australian residency or citizenship status, and address
• Payslips or other documents that verify your salary (if relevant)
• Proof of any other kinds of income, such as Centrelink payments, rental income and income from other investments and assets
• Details of your regular expenses and bank statements to verify those

The process of actually applying for a credit card can be fairly straightforward. You will need to do the following:

• Complete the fields in an online application form
• Supply documents that prove your identity and financial situation
• Sign the contract you’re given by your lender if they approve your application

The complicated part generally comes before that - choose a credit card limit and then compare a range of credit cards available to pick one that’s suitable for your needs. Making the wrong choices in those departments could result in you paying more in fees and interest without gaining a commensurate benefit from the card. At worst, it could even send you spiralling into unhealthy credit card debt.

It’s well worth your time to make careful choices in those areas! So, have a look at our credit card guide to help you understand more about what you need to know to help make an informed decision and select a card that’s suitable for your needs.