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Applying for your first credit card can feel like applying for your first job. Even entry-level positions want two years of experience.
Building a strong credit history can open other financial doors later in life, so it is important to start early. While you might be allowed to get a credit card once you turn 18, you may have a hard time finding a company that will issue you one.
Are You Ready for Your First Credit Card?
Like getting your driver’s license, your first credit card is a responsibility that many take for granted once they have it. It’s easy to forget how dangerous a car (or card) can be when used incorrectly.
It can also be easy to get wrapped up in the perks like cash back, no foreign transaction fees, and rewards programs that credit card issuers use to encourage you to spend more. The right card for your first card might not have any of these benefits but instead rewards you for building good payment habits.
Before applying, understand how misusing a credit card can damage your credit in both the short- and long-term. If you currently don’t stick to a budget and overspend on a debit card, it might not be the right time to get a credit card. Focus on building good money habits and then when you feel more confident in your spending consider applying.
How Do I Get a Credit Card With Bad Credit or No Credit History
To decide if you are a good candidate for revolving credit, a card issuer will pull your credit report from one of the major credit bureaus; Transunion, Equifax, or Experian.
It can feel like every credit card application is looking for existing good credit or a strong FICO score when you are applying for your first card.
If you are between the ages of 18 and 21, and currently aren’t earning income, you may have a hard time getting approved by credit card companies without a cosigner on your application. But there are solutions specifically for those with little to no credit history or income, focused on using a card in building credit.
Read more: How to Build Credit in 6 Easy, Smart Steps
Become an authorized user on your parents’ or loved ones’ credit card
If you have a willing friend or family member with good credit, becoming an authorized user on their account may be a great step to building your own credit. You don’t even need to use the credit card once your information has been added.
Not all credit card providers report authorized user accounts to the major credit bureaus. Before becoming an authorized user, check with the card issuer to confirm that your good spending habits will be recorded.
As long as the primary cardholder continues to practice good credit habits, your credit will grow alongside theirs. However, this also means that if they are not practicing good credit habits, your score will reflect these poor practices. Keep that in mind when considering who to ask.
Apply for a secured credit card
If becoming an authorized user on a family member or friend’s credit card isn’t an option, a secured credit card is a strong alternative. After being approved for the secured card you will deposit an amount of money into a bank account offered by the financial institution. Your line of credit will match this deposit amount.
This might sound like a debit card, but a secured credit card will count towards your credit history, while a debt card does not. Some card issuers may offer a ‘graduation’ component. After you have established credit history with the secured card you may be eligible to transition into the issuer’s traditional unsecured credit card.
Apply for a student credit card
Currently enrolled college students might be able to apply for a student credit card. The income requirements are often not as high as a standard credit card, and the credit limits are low to encourage good borrowing habits. However, student cards often have high-interest rates and annual fees, offsetting the risk the lenders take on by offering a card to student borrowers.
Habits of Responsible Credit Card Holders
Now that you have your first credit card in hand, make sure you build strong habits for responsible use. This could be your first steps to building your credit, so build a strong and solid foundation with your new credit card.
Never skip a monthly payment
Individuals with excellent credit all have something in common, they never make late payments on their credit lines. Not only do late payments show up on your credit report, but they can also lead to interest charges or late fees. Make a calendar alert or set up autopay on your credit card so you never miss a due date.
Pay off the balance in full each month
Banks now have tons of payment reminders through text or email, so there is no excuse for not paying at least your minimum payment on time. Another reason to never miss a payment or carry a balance — in 2018 the average interest rate for credit cards hit 17.21% annual percentage rate (APR). Never skip a payment and always pay off the full balance for the card each month.
Strong payment history of full and on-time payments will also raise your credit score over time. For a first-time cardholder, it can be easy to use all your available credit each month, but it is an easy way to find yourself up to your eyes in debt. Treat your credit card as a debit card, and only spend what you know you have the budget for.
Use your credit card for needs, not wants
It can feel like the world is your oyster when as a young adult you get your first credit card. You could buy anything in your credit limit, but it isn’t a good idea. Buy only the things you need to, stay within your budget. Especially with your first card, staying away from overspending, cash advances, and credit card debt will set up good habits for when you do have more income and want to save up.
Read more: How to Read Your Credit Report