There’s a lot to consider when applying for a credit card, especially if you’ve never had one.
“New cardholders should focus on building a good credit history with their first card while avoiding taking on more credit than they can afford to repay,” Bruce McClary, the vice president of communications for the National Foundation for Credit Counseling, said in an email.
Staying financially responsible with your credit card can help you avoid getting buried in debt and even help you build credit down the road. “Over time, the care that is taken while building a healthy credit history will pay off when borrowing for a mortgage or car loan in the future,” McClary said.
But before you even think about that, you may need to get approved for your first credit card. This can be a bit difficult, particularly for anyone under 21. (Federal law prohibits lenders from issuing credit cards to anyone under that age unless they demonstrate an ability to repay or have a willing co-signer.) Here are five tricks to getting approved for your first credit card.
1. Check Your Credit Score
Before you apply for any credit card, whether it’s your first one or not, it’s a good idea to know your credit scores. Doing so can give you an idea of where your credit stands and what types of credit cards you may qualify for. (You can see two of your free credit scores, updated each month, on Credit.com.)
2. Shop Around
When you don’t have a robust credit history or you have a lower credit score, you may have a smaller pool of credit cards to choose from. But that doesn’t mean there aren’t options (more on these categories below) — you just have to do your research. It’s important to comparison shop before you sign up for any line of credit.
“Consumers should be familiar with all of the terms and conditions before signing anything, and should shop competitively for a card backed by an issuer they can trust,” McClary said.
3. Consider a Co-signer
Most of the major credit card issuers have student credit cards. In some instances, in order to get one — or a traditional credit card in general — you may need or want to look into getting a co-signer.
“A co-signer with a healthy credit history can make a big difference for someone looking to get started with a card offering lower rates and better terms,” McClary said.
It’s very important to manage a cosigned account wisely. Pay your account as agreed each and every month. Remember, a cosigner is doing you a favor, and if you should fall behind on payments and the account becomes delinquent, the delinquency will show up on your cosigner’s credit report as well as your own.
4. Keep Secured Credit Cards in Mind
If you don’t have a credit history or a co-signer, you may want to try applying for a secured credit card. Secured credit cards require a cash deposit that serves as a credit line for the account. (You can read about the best secured credit cards in America here.) These cards are designed specifically for people looking to build or rebuild credit and, as such, can be easier to qualify for.
5. Consider Applying for a Retail Card
“Oftentimes, it may be easier to get approved for credit at a retail store or gas station than for a major credit card,” Tara Alderete, director of education at ClearPoint Credit Counseling Solutions, said in an email. “Once you have been approved, making regular charges that you pay off each month can help you build credit.”
If you take this route, it is important to read the terms and conditions before signing up. A store card, which typically offers a discount upon application, often has lower credit criteria than traditional cards, making it easier for applicants to get approved. But that can come at a price, as retail cards often carry high interest rates. You’ll want to be sure that you only charge what you can pay off each month to avoid the interest.
Building Credit With Your New Credit Card
Being responsible with your credit card can help you build a strong payment history that can potentially improve your credit score.
“Whether building credit with a secured card or with the help of a co-signer, it’s important to make regular, on-time payments and charge only what you can comfortably afford to pay off each month,” Alderete said. “Monitor your credit report regularly to be sure the information reported is accurate.”
You can review your free annual credit reports for any errors you need to dispute, like mysterious accounts that were opened in your name or unknown addresses on your credit report, which may be signs of identity theft.
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