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How to apply for your first credit card
Your first credit card can be the gateway to building your credit and will expand your financial options.
Credit cards are needed for simple transactions like reserving a hotel room or making a long-term purchase. But more importantly, you need a credit card simply to establish a credit history. You need to use your credit card wisely to keep a good credit history, as it will be a determining factor of approval for personal and home loan applications.
Tips for applying for your first credit card
Will you be using your credit card to make everyday purchases? Will your payment habits affect if you make timely payments or not? Do you need a credit card with a rewards program? Once you figure out what you’re looking for, you can apply for your first credit card.
Understanding that credit cards are a great responsibility, there are factors to consider:
- Job stability. Banks and financial institutions screen your qualifications before granting you a credit card, including your job’s stability as well as your salary.
- Credit history. If you have a previous credit history, banks will check on your standing to set a credit limit and confirm you’ll be able to handle repayments .
- Personal and financial information. Banks and financial institutions also require you to submit specific documents for your application. Unfortunately for people with no credit history, this can be somewhat challenging as many banks will not want to take a chance on a credit newcomer. An option is to start off with a secured credit card to get your credit history rolling.
If you ever wanted to be able to apply for a personal loan or a home loan, you can do so much easier by applying for a credit card as your initial step.
At what age can I apply for a credit card?
The minimum age you can apply for a credit card is 18, although you can be added as an authorized user to another credit card account as early as 13 and 15. This is most common credit card choice for teens.
Those who are 18 to 21 can apply for a credit card under 21, but must prove they can independently pay the card bill. Any income would work as proof, such as scholarships and grants or wages, if you have a job.
For those who are 21 or over, federal law doesn’t require proof of the ability to pay the card bill. Typically, credit card providers don’t ask you for this information, but they may do so if they’re unsure if you can repay your card bill.
What are the options for my first credit card?
I’m a student.
Many credit card companies offer a first credit card for students. These cards will probably have a low limit to help ensure that you do not overspend.
I don’t want to change banks.
Your current bank more than likely has a credit card they offer to their customers. It may require that you keep at least one open account as long as you have the credit card.
I regularly shop at the same stores.
Department stores and chains also offer credit cards. Be sure to compare these store cards carefully, as they could have high interest rates.
I don’t have a social security number.
There are a selection of credit cards available that don’t require a SSN for application. You could also apply for an Individual Taxpayer Identification Number before applying for credit cards.
When should I get a credit card?
Here are a few factors to consider before applying for a credit card. In many cases, they’re more important than your age.
- Do I make enough money?
Credit card issuers don’t have specific credit card application income requirements, but they want to make sure you can afford to pay off your debt. This is also one of the main factors determining the amount of the credit line you can get.
- Do I have a good credit history?
Do you have unpaid loans or fines, or is your credit history a clean slate? You can request a free copy of your credit report from each of the major bureaus once a year. Before you apply, check these details and decide if your financial history supports you.
- Do I have a budget?
In addition to interest costs if you carry a balance, some credit cards charge an annual fee. Consider how much you could afford to pay in account fees so you can decide if it’s worth it at this stage of your life. If you are working with a budget, you might consider a cheaper credit card.
- Can I control my spending?
Similar to budgeting for credit card costs, think about how much you’re likely to use the card. Can you stick to costs that you’re able to pay back each month? If you’re unsure but still want to apply, you could also consider a secured card to help keep your spending in check.
- Do I have the knowledge to make good financial decisions?
Having solid financial knowledge — such as how to save and how to properly use a credit card — is more important than how old you are. Understanding the mechanics of credit cards will help you be a responsible cardholder.
How to improve your chances of approval when you apply for a credit card
If you’re ready to apply for a new credit card, there are several ways to increase your chances of approval. You can start by comparing credit cards so you can find an option that suits your situation. Then check the eligibility requirements and get all the necessary details and documents together for the application.
Keep in mind that these features would differ from one financial institution to another. Compare each feature first before you make up your mind for the appropriate credit card.
If you are declined with your first credit card application, do not lose hope because you can identify why your credit card application was rejected and apply for it again.
Compare credit cards for no credit history
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Maintain your credit standing with your first credit card
As we’ve stated, most peoples first credit card often establishes your credit history, so it important to pay attention to a few things.
- Do not overspend and pay all of your bills on time.
- Having a line of credit for a long period is good for your credit history, so keep your balance low and your payments regular.
- Banks often give newcomers higher interest rates, so be aware of this and the long-term cost of carrying a balance. Once you have established a good credit history, see if you are eligible for an interest rate reduction or shop around for new card. If finances are a concern, review some of the cheapest credit card options available.
When it comes to personal finance there are few things more important then the establishment of your first credit card. Being responsible with it is the key to your future credit rating.
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