Whether you’ve just graduated from high school or college or are at some other point in your young adulthood, you may have considered getting a credit card. It can be a great tool in building credit, but also represents a major financial responsibility.
Plus, how do you even qualify for your very first credit card?
There are actually quite a few ways to accomplish this. After all, everyone has to start somewhere, right?
Keep reading to find out everything you need to know about getting approved for your first credit card. We’ll also give you some tips on how to use it responsibly.
How do you get a credit card for the first time?
There are typically three ways you can get approved for your first credit card, especially if you’re under 21 years old.
Use Verifiable Income
One of the biggest factors credit card companies look for is verifiable income. This indicates that you have the financial means to pay your minimum balance each month. Unfortunately, money from your parents doesn’t count. So, if you’re in college and get cash from home each month, that won’t help you get a card.
Basically, you need to have some type of job, whether it’s part-time or full-time. You may also be able to report scholarship or grant money, but not your student loans. That’s considered debt, not income, even if you haven’t reached the repayment stage yet.
When it comes to reporting verifiable income, you need some sort of documentation, whether it’s tax statements or pay stubs. You may not be asked to provide these, but you need them on hand in case they are actually requested by the credit card company.
Use a Cosigner
To get a larger line of credit or if you have little verifiable income, consider using a cosigner for your credit card application. This could be a family member or close friend with established credit history, willing to share responsibility with you.
Before you call your parents or older siblings and ask them to cosign, here are a few words of caution. Any activity on the card equally impacts both of your credit reports. The debt will be listed on both of your reports, as will any late payments. You’re both on the hook so if you decide to default on the card, your cosigner will also start getting collections calls.
If your cosigner has access to the credit card account, they could make charges that you’ll be responsible for paying off. Use this strategy only with someone you inherently trust and who understands the potential consequences of sharing a card with you.
Get Added as an Authorized User
Another option to build credit for people who don’t have much of an income is to get added to a credit card account as an authorized user. Similar to using a cosigner, it will generally be a family member or someone you trust.
The primary account holder can add you to their credit card account and their full payment history will be added to your credit report. This will immediately give you good credit scores and allow you to apply for better credit cards that you otherwise wouldn’t qualify for.
What is the easiest credit card to get?
Be sure to compare your options because these specialty cards frequently come with high interest rates or annual fees. You’ll want to look for a credit card with a low annual fee or one that waives the annual fee altogether.
Establish your credit history by finding a credit card issuer that reports your monthly payments to three major credit bureaus. It’s also good to check with your bank if you already have a savings or checking account. Sometimes that existing relationship can get you the approval you need. Here are some other options to consider when searching for your first credit card.
Student Credit Cards
Many branded credit card companies have student credit cards available. For college students with at least a part-time income, a student credit card could be an excellent option. They usually come with low credit limits. However, you can get a higher credit line once you’ve established a positive payment history.
Just about any major chain store offers a store credit card these days, whether it’s a department store or a specialty store. They’re often easy to get approved for because they start with low limits. You can often even apply right at the checkout counter.
But just like anything, retail cards come with some limitations.
You can typically only use a retail card in that particular store, or sometimes in other stores within a retail group. For example, if you get a Gap card, you can also use it at Old Navy since they’re in the same brand group.
Just be sure that you don’t use your retail card as an all-access shopping pass, especially just to access some type of rewards bonus. You still need to pay off the balance each month. Otherwise, you’ll likely be paying above-average interest.
Secured Credit Cards
You probably won’t get approved for an unsecured credit card that targets people with excellent credit if you have yet to establish credit. Instead, consider taking out a secured credit card. You have to pay a security deposit, which is held in a bank account and equals your credit line.
However, you can’t use that money to pay off your balance. It’s used as collateral in case you start missing payments on your secured card. But if you’re having trouble getting approved for other credit cards, a secured card can be a good first step to build credit before you move up to an unsecured card.
The Secured Chime Credit Builder Visa® Credit Card is a great option for those looking to establish or rebuild their credit. Key features include:
- No credit check or annual fees.
- No minimum requirement for a security deposit.
- Reports to all three major credit bureaus.
- Encourages responsible spending with real-time alerts and instant block features.
- Optional automatic payments and a round-up9 savings feature.
- User-friendly mobile app and excellent customer support.
Overall, the Chime Credit Builder Card offers a valuable, user-friendly tool for credit-building without unnecessary fees or complications.
How to Start Building Credit
If you’ve never had a credit card or a loan in your name, you may not have much of a credit history. It can take a few years to build a strong credit history and improve your credit scores.
How can a credit card help you achieve this goal?
Positive Payment History
A positive payment history is the biggest factor in determining credit scores. This can lead to better interest rates and terms on future financing, like student loan refinancing, auto loans, or mortgages.
Once you start paying your credit card bill on time each month, you’ll start to get positive entries on your credit report. Over time, that adds up.
Now it’s important to note that as long as you pay your minimum balance due each month by the due date, it counts as an on-time payment.
But here’s the catch.
Even though your entire balance isn’t due, anything you don’t pay starts to accrue interest. So, the next month, your balance will be higher, even if you don’t make any new charges on your credit card.
Using Your Credit Card Responsibly
When you keep using your card without paying it off, your debt can quickly skyrocket, so don’t use it for things you can’t afford. Yes, it’s a nice backup for a financial emergency.
But make sure you have a plan of how you’re going to repay each purchase.
If you’re just getting your first credit card as a way to build your credit, then all you have to do is use it to pay one bill a month. You can set your credit card bill to be paid automatically through your checking account or create a monthly reminder. That way, you can take advantage of those on-time monthly credit card payments, which account for a large amount of your credit score.
Remember, even one late payment can cause a major drop in your credit score.
Create a plan that allows your credit card to work for you, not against you.
When you first start applying for credit cards, expect to get denied. It’s likely to happen if you don’t have any credit history. But be strategic with your applications. Don’t shoot for top-tier rewards programs because you’re very unlikely to get approved for cards that require excellent credit.
Instead, do your research. Every credit card application temporarily reduces your credit score by a few points. Pick ones that are targeted towards your demographic and also apply for them around the same time. They’re often counted as a single inquiry by the credit bureaus.
By using these few tips, you can start building your financial history with your first credit card account. Go forth and use it responsibly!
First Credit Card FAQs
What is a credit card?
A credit card is a financial product that allows you to borrow money from a lender, up to a certain limit, to make purchases or withdraw cash. You are required to pay back the borrowed money, plus any interest, at a later date.
What are starter credit cards?
A starter credit card is a credit card designed specifically for individuals with little to no credit history or those looking to rebuild their credit. These cards typically have more lenient approval requirements and lower credit limits than traditional credit cards, making them ideal for first-time credit card users or those with past financial difficulties. Starter credit cards often report to major credit bureaus, helping cardholders establish a positive payment history and improve their credit scores over time.
How do I get my first credit card?
To get your first credit card, you will need to apply for one with a credit card issuer. This can typically be done online, over the phone, or in person at a bank or credit union. You will need to provide personal information, such as your name, address, and income, as well as information about your employment and credit history.
What is a credit score?
A credit score is a three-digit number that reflects your creditworthiness, or your ability to pay back borrowed money. Credit scores range from 300 to 850. The higher your score, the more likely you are to be approved for credit and to receive favorable interest rates and terms.
Can I get a credit card with no credit history?
If you don’t have a credit history, it may be hard to get a credit card. Credit card issuers often look at your credit to decide if they will lend to you and at what rate. But some credit card issuers offer cards for people with no or limited credit history. These cards may have higher fees and interest rates, but they can help you build credit.
What is a secured credit card?
A secured credit card is a type of starter credit card that requires you to put down a security deposit as collateral. The amount of the deposit becomes your credit limit. You can use the card just like a regular credit card. Secured credit cards can be a viable option for people with no credit or poor credit and are easier to qualify for than unsecured cards.
What is a cosigner?
A cosigner is someone who agrees to be responsible for paying off your credit card debt if you are unable to do so. Having a cosigner with good credit can improve your chances of being approved for a credit card.
What is a credit limit?
A credit limit is the maximum amount of money that you can borrow with your credit card. This limit is set by the credit card issuer based on your creditworthiness and other factors, such as your income and debt level.
What is a credit utilization ratio?
Your credit utilization ratio is the amount of credit that you are using compared to the amount of credit you have available. For example, if your credit limit is $1,000 and you have a balance of $500, your credit utilization ratio is 50%. It is generally recommended to keep it below 30% to help maintain a good credit score.
What is a grace period?
A grace period is the time between the end of your billing cycle and the due date for your credit card payment. During this time, you are able to make new purchases with your credit card without accruing interest on those purchases.
The grace period usually lasts for around 21 days. However, this can vary depending on the credit card issuer and the terms of your credit card agreement.
If you pay your balance in full before the end of the grace period, you will not be charged interest on your purchases. However, if you carry a balance from one billing cycle to the next, interest will be charged on any unpaid balances from the previous billing cycle. This also applies to any new purchases made during the current billing cycle.
It is important to note that not all credit cards have a grace period. Some charge interest on new purchases from the date of the purchase. Read the terms of your credit card agreement to understand how your grace period works and when you will be charged interest.
What are some of the most common credit card fees?
There are several fees that credit card issuers may charge:
- Annual fee: This is a fee that you pay each year for the privilege of having a credit card. Some credit cards have no annual fee, while others charge a fee that can range from $25 to several hundred dollars.
- Late payment fee: If you do not make your minimum payment by the due date, you may be charged a late payment fee. The amount of this fee can vary, but it is usually around $25 to $35 for the first offense, and it may increase for subsequent late payments.
- Over-the-limit fee: If you exceed your credit limit, you may be charged an over-the-limit fee. This fee is typically around $25 to $35.
- Balance transfer fee: If you transfer a balance from one credit card to another, you may be charged a balance transfer fee. This fee is often a percentage of the amount transferred, typically around 3% to 5%.
- Cash advance fee: If you use your credit card to withdraw cash from an ATM or to make a cash advance at a bank, you may be charged a cash advance fee. This fee is typically a percentage of the amount withdrawn, typically around 3% to 5%.
- Foreign transaction fee: If you use your credit card to make a purchase in a foreign currency or while traveling abroad, you may be charged a foreign transaction fee. Foreign transaction fees are usually a percentage of the transaction amount, typically around 3% to 5%.
- Returned payment fee: If a payment that you make with your credit card is returned or declined, you may be charged a returned payment fee. The amount of this fee can vary, but it is typically around $25 to $35.
You should read your credit card agreement carefully to understand what fees may be charged and how they are calculated.