After graduating from college and getting a full-time job as an adult, there are many purchases you may need to make now that you’re in the “real world.” From furnishing your apartment to making sure your bills are paid, sometimes, you need a little assistance financially. You might also be looking for a way to save money when you’re spending so much.
Using a credit card responsibly may help you tackle some of your expenses. But, can you get one if you have no credit history? Yes, it’s possible, and here are some things you may want to consider.
Get a Secured Credit Card
A secured credit card will assist you in building up your credit every time you make, and pay off, a charge. Secured credit cards typically come with a low credit limit, keeping new credit users from racking up a lot of debt. These cards are secured by the cardholder’s money in a separate account. That way, if the cardholder can’t make their payment, the financial institution can pull the money from the other account to cover the bill. Think of a secured credit card as a credit card with training wheels, which keeps you from plunging into debt. It also decreases the financial institution’s risk of lending money to you.
Our secured credit card requires the cardholder to make a minimum deposit of $500 into a savings account to be used as collateral. This way, we know the cardholder has money to draw on should they suddenly become unable to pay their bill. Essentially, it’s like a security deposit on a rented apartment. Their credit limit will be equal to their deposit; up to $2,000 can be deposited.
As with any credit card, failing to make on-time payments on a secured credit card can hurt your credit, so it’s important to make sure you only charge what you can afford to pay off. Once the cardholder establishes credit and proves they can use the card responsibly, they may have a better chance of being approved for a regular credit card, like our Classic Card or Founder’s Card.
Have a Parent or Another Person Cosign for You
While you may not want to have your parents’ assistance with getting a credit card, parental co-signing is a common way for those just beginning to build credit to get their first credit card. When a parent, or another responsible adult with a good credit history, co-signs on a card, they’re promising to take care of any payment problems that may arise with the card.
It’s the financial institution’s way of ensuring their company won’t be left in the lurch. If you don’t pay your bill, the company has someone else they can get the money from. Cosigning does have some disadvantages, however, including:
- If you fail to pay your bill either in full or at the minimum, it could cause long-term damage to your cosigner’s credit, as well as your own.
- You may not want your cosigner to be involved with your finances.
- Not all credit cards allow cosigners.
Find a Job
What does getting a job have to do with getting a credit card? To be a responsible credit card user, you need a way to pay your debts. Having a job shows the financial institution that you have an income and a means to pay your bills each month.
When you apply for your credit card, the “annual income” box can be filled in based on your income. If the income box is blank, your chances of getting approved for a credit card may be lowered due to a concern about your ability to pay your bills. If you do have income, the amount you put in that box may impact the credit limit you’re approved for. The lower the income, the lower your credit limit might be.
Be Sure to Research Your Options
You may be tempted to apply for several credit cards when you have no history, hoping to get a bite on one. However, doing this can hurt your credit, and the more cards you apply for, the worse it looks. Carefully research your options to decide which card would work best for you. Apply for that one, and no others at the same time.
Also, remember to be wary of credit cards that don’t require a credit check. You’ll often find annual fees or sky-high interest rates attached to these cards, which can make it difficult to keep up with your monthly bills.
Many retailers have store-branded credit cards, which you can only use at their establishment. The advantage for them, of course, is that you get a credit line that can only be spent on their merchandise. Store credit lines tend to be lower than those of other credit cards and often come with higher interest rates and late fees.
While it may be enticing to get a store credit card to establish good credit, it could cost you more money in the long run. For instance, you may feel pressured to spend money at that store to help build your credit — and if you don’t pay off the entire balance each month, you’ll likely face high interest charges.
Consider Our Secured Visa Card
We offer a secured Visa that’s perfect for young adults who have not had a credit card before. Our online application is easy to complete, and our card has benefits like a relatively low $500 minimum deposit, which you keep in a savings account, and no application, activation, or inactivity fees. The rate is the same as our Classic Visa — currently 9.9% APR (Annual Percentage Rate). Contact us for information on this product if you’re interested in learning more.
Find more money management videos and resources on our WalletWorks page.