How to Get Your First Credit Card
Ways to Get Your First Credit Card
Eighteen is a liberating age. You're legally an adult. You can vote. You may be going to college soon if you're not already there. And, you can get a credit card.
As eager as you may be to get your first credit card, many credit card companies aren't so eager to give you one. Rather than putting in several credit card applications to see who's going to approve you, target just a few companies that are known for giving credit cards to first-timers.
Make Sure You're Ready for Your First Credit Card
Being old enough to qualify for a credit card does not mean you’re ready for one. You need to be responsible enough to charge only what you can afford and to pay your bill every month without being reminded. Getting your first credit card before being fully prepared can spell disaster for your credit. Once your credit is damaged, it can be difficult getting it back on track.
Don’t set yourself up for failure; learn all you can about credit cards before getting one. If you're not ready, there are steps you can take to get there: How to Prepare for a Credit Card.
Understand the Credit Card Landscape for Young Adults
Getting approved for the first credit card can be tough, especially if you're under age 21 and more so if you don't have a job.
First, federal law requires that young adults under age 21 have verifiable income before they can be approved for a credit card without a cosigner. Unfortunately, an allowance from your parent does not count. You must have income from a job. However, child support or government benefits may allow you to be approved.
If you don’t have income, then you’ll have to find someone who’s willing to open a joint credit card with you or make you an authorized user on one of their credit cards.
The second thing that makes it tough to get the first credit card is an insufficient credit history. And, well, credit history is one of the primary factors that credit card issuers consider when approving an applicant.
Get a Job
Having a steady income, ideally, from a part-time or full-time job, will put you in a good position to get your first credit card. Credit card issuers have to make sure you can afford to repay a credit card balance before they approve you. Without your own income, you'll have to have a joint applicant (who does have income) to get approved for your first credit card.
Where to Get Your First Credit Card
- Major Credit Card Issuers
If you're enrolled in college, you have a very good chance of getting approved for a student credit card from a major credit card issuer. Don't assume every card with 'student' in the title is a good deal. Some student credit cards have high-interest rates and annual fees, both which make a card a bad option for a first credit card.
- Your Bank
If you've been responsible with a checking or savings account, try applying for your first credit card at your bank. An existing banking relationship can improve your chances at getting a credit card application approved, especially if you’ve handled your account responsibly (e.g., no overdrafts). You can apply online, but visiting a bank branch would put you face-to-face with a representative who may have more authority to get your application approved.
- A Retail or Department Store
Retail and department stores typically have more favorable approval odds. On the downside, they have high-interest rates that make it expensive to carry a balance from one month to the next. Another downside of these cards is they aren't versatile—you can only use them in that store. That limits what you can purchase. However, retailers often encourage spending by offering discounts for using the card.
Having a retail store credit card as your first credit card can help you build up a good enough credit history to apply for a major credit card within a few months.
- A Secured Credit Card
When your (lack of) credit history keeps you from getting a standard credit card, you can apply for a secured credit card. With a secured credit card, you make a deposit against the credit limit of the account. The bank holds the deposit just in case you don't make your payments as agreed. You may have the chance to convert an unsecured credit card later on. Don’t worry that a secured credit card will hurt your chances at getting other credit cards—there’s nothing on your credit report to indicate you have a secured credit card.
Look for Cards That Target Moderate or Limited Credit
Certain credit card websites list the type of credit history needed to get approved. For a first credit card, look for credit cards that accept applicants with moderate or no credit. Applying for cards that are geared toward your specific credit history improves your chances of getting approved. Avoid applications for credit cards requiring "excellent" credit as you will probably get denied.
Ask Someone for Help
You may have a relative—a parent, for example—who’s willing to help you get your first credit card by cosigning with you. Cosigning is risky —any mistakes you make will affect your and the cosigner's credit—but it can be a good way to jumpstart your credit. Agree upfront that you’ll be responsible for making the payments on time each month and that you'll abide by all the credit card terms. Then, consider closing the joint account once you can qualify for a credit card on your own.
Don't Be Discouraged By Denials
Don't be surprised if you're denied for the first credit card you apply for—or the first few credit cards you apply for. Even people with established credit histories are sometimes denied. It may be helpful to know that you’ll get a letter, an adverse action notice, in the mail that includes the specific reason you were denied. The information in this letter will be useful in planning your next step. You may need to apply for a different type of credit card or jumpstart your credit by using a secured credit card.