Getting the first credit card – no Credit History
Getting the first credit card that you’ve ever owned can be difficult, especially if you have no credit history.
After all, creditworthiness is based on your past performance in repaying creditors. If you have no credit history at all,
proving that you are a good steward of your available credit can be a big challenge. The irony in that difficulty is that no
one will extend credit to you credit without credit history and you can’t build credit history without someone taking that
initial first chance on you. In today’s economy, getting a credit card is harder than ever before, even for those who established
a strong payment history. The tips that follow will help you in getting the first credit card account established so that you can
begin building a positive credit file.
Secured and Unsecured Student Credit Cards
When selecting a student credit card or credit cards for college students, you will need to determine if you want a secured or
unsecured card. An unsecured credit card for students is a card that is issued based on the bank or credit card issuer’s belief
that you will repay them for the credit that they extend to you. Most students can qualify for a student credit card of some type.
There are also secured credit cards. These types of credit cards are super easy to get and require that you deposit an amount
of money that is usually equal to the amount of credit that you want to have. For example, if you want a $500 credit line,
then you would make a deposit of $500 to the issuing bank. After a period of time has passed, usually a year, your secured
credit card will usually convert to a standard credit card, and the issuer will return your deposit to you. Whether a secured
or unsecured credit card for students is best for you depends on your needs and your ability to make a deposit.
Are You a Student?
Credit card companies are more than happy to give you a credit card if you are a student, regardless of your lack of credit history.
If you are in college right now, you have an almost 100% chance of being approved for a student credit card with any number of banks.
Credit card companies send out all kinds of offers for student credit cards, which makes getting the first credit card a bit simpler.
Look for cards with the lowest APR possible, and opt for a card that doesn’t have an annual fee. This will make the credit extended
to you cost less. Don’t go for the first offer that you get – or the first credit card offer that you see online.
Do You Have a Checking or Savings Account?
If you have an account in good standing at your local bank, your bank is a good source for a credit card.
Speak with your bank about opening up your credit card account. Since you have an existing relationship with the bank,
either with a checking account or a savings account, you have a higher chance of getting their credit card. And although
it may be possible to apply for your bank’s credit card online, visiting the bank to speak in person with someone who might
have the ability to approve you on the spot is preferable.
Start With a Gas Card or Department Store Charge Instead
The easiest credit cards to get, especially for those with no credit history, are gas cards or department store charge cards.
By establishing a credit account or revolving credit of this type first, you can quickly build the history that you need to qualify
for an actual credit card. While you will not be able to use the card anywhere except at the gas station or the department store
that issues it, it nonetheless provides you with a valuable tool for establishing yourself as a worthy borrower.
Secured Credit Cards for First-Time Card Holders
If your insufficient credit history is holding you back in your search for a credit card, then you can start out with a secured
credit card instead. The secured credit card is secured by the deposit that you make with the bank that issues the card.
The bank will hold the deposit to guarantee that the credit extended to you is repaid. If you make your payments on time, most
credit card issuers will eventually convert your secured card to a regular credit card and return your initial deposit.
Special Rules for First-Time Cardholders
The Credit Card Act of 2009 requires that those seeking a credit card that are between the ages of 18 and 21 prove that they
have their own income stream before they can be approved for a credit card. Although part-time incomes will do, parental income
cannot be counted, even if your parents have agreed to pay your bill. If you don’t have your own income, and you are under 21,
then you will need a co-signer with income to sign with you to get a credit card, under the new law.
Getting the first credit card, particularly with no credit history, is a financial milestone. Use your credit wisely and
take out no more credit than you can afford to reasonably pay each month and you’ll quickly find yourself on the road to meeting
your financial goals.
Updated: January, 8 2012