Ever wonder what happens when you apply for a credit card? You submit the application, but what happens afterward remains a mystery to most people. That's because credit card applications can be processed a bit differently, depending on the issuer. Underwriting standards vary, issuers may look at different versions of your credit reports or credit scores and varying algorithms get crunched.
Still, regardless of how a credit card issuer chooses to review your application, there are a few things that are certain to happen during this process. Here are five of them.
1. Your Identity Will Be Verified
When asked for their personal information, some people would prefer to remain anonymous and create a pseudonym. But intentionally providing misinformation — or lying — on a credit card application is illegal (it's essentially considered fraud.) Plus, when you apply for a credit card, you will be asked for a lot of personal information, including your name, your birth date and your Social Security number. All of these must match up with a real person who has an actual credit history before your account can be considered. If you don't provide all of this relevant info or make a mistake when filling the form, you can expect the card issuer to contact you for accurate info.
2. You'll Receive an Immediate Response
The credit card issuer will always respond to your application immediately but not necessarily with a decision. In some cases, applicants receive instant approval, but they're just as likely to only receive confirmation that their application has been submitted with a promise of further review.
3. Your Credit History Will Be Examined
Once the card issuer has verified your identity, it will research your credit history with at least one of the three major consumer credit reporting agencies. In fact, your authorization to do so was included in the fine print you agreed on when you submitted your application. Scrutiny will be placed on your payment history, the amounts you owe and any other recent applications for new credit.
4. You'll Receive a Decision
Every job seeker has had the experience of applying for a job but never hearing back from the employer. At least when you apply for a credit card, you're guaranteed to find out if you were approved or denied. If it's the former, you can look forward to receiving a card in the mail, along with a statement of benefits and terms and conditions. If your application is denied, the card issuer will send a letter called an adverse action notice. This legally mandated notice will explain why your application was denied, say, for carrying too much debt or having too many recent credit inquiries on your credit report.