Are you wondering how to get your first credit card with no credit? You need credit to apply for credit cards, loans, rentals and even some jobs. To get credit, you need credit cards, loans, rentals and jobs. You can probably see the catch-22 here.
In 2009, Congress decided the industry needed some reform. Certain practices were not fair to consumers, and a new level of transparency needed to be established. This led to the creation of the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, which provides protection for consumers but also makes it tougher to apply for your first credit card. You’ll now need to provide proof of income or have a financially stable co-signer if you want a card.
If you’re a young person looking to begin building credit for the first time, you might be wondering how to get your foot in the door. If you’re an older person who has never had credit for various reasons, you’ll be facing an even more difficult challenge. However, it’s never too late to get started.
You won’t be able to use income from your parents or spouse to help your case, which means that you’ll need a job before you can get a card. If you are self-employed and generate income that way, you will need a solid method of proving it. You don’t necessarily need a full-time job either. Any form of employment should help you qualify for a card.
Step Two: See if You Pre-qualify
Pre-qualification allows you to see if there are credit cards available for you without having to go through the application process. An application for a new credit line will usually cause a temporary drop in your credit score. This is why it isn’t wise to begin applying for a bunch of cards without doing the proper research.
Pre-qualification involves a soft credit check, which won’t show up on your credit report later. However, when you actually apply for one of the cards that you pre-qualify for, your credit report will take a hit. It’s also important to point out that pre-qualifying doesn’t guarantee you’ll be approved. It simply means that the company generally approves people with your current credit score.
Step Three: Examine Your Options
1. Student Credit Cards
If you’re a young person, you’re probably in school, which means you can apply for a student card. Student cards are available for college students who are lacking both secure income and credit history. You need to be wise and research your choices, however. Some student cards come with unreasonable interest rates or annual fees. This might be worth dealing with in order to build credit, but it’s important to be honest with yourself about whether or not you can handle the costs.
2. Secured Credit Cards
Not everyone who is new to credit is a student or even a young person. Various circumstances sometimes cause people to fail to begin earning credit until later in their lives. If you find yourself in this troubling predicament, you’ll be glad to know there is an answer. Secured credit cards allow you to make a security deposit on the card. You can then use the card in the same way you would use a regular card. You might be worried about paying the security deposit. If so, you’ll be glad to know that you can get a secured credit card for as little as $49.
3. Store Cards
Most large retail stores offer credit cards, and they are often a great option for those who are new to credit. These cards are often approved for people with bad or no credit, but they usually have high interest rates. If you choose to go with a store card, be sure to pay off the full balance at the end of each pay period to avoid unnecessary interest fees.
Step Four: Find Your Co-signer
It might prove to be difficult to get a credit card on your own, especially if you’re in a unique situation. For various reasons, some people don’t end up starting their credit journey until later in life, and this can lead to a lot of problems. A co-signer can be a good solution, but only if you find a willing party. Not everyone is going to want to take on the responsibility of co-signing for you, and you likely don’t want just anyone involved in your personal finances. Be sure to think carefully before you choose a co-signer. A trustworthy figure, such as a parent, is probably your best bet.
Once you get your first credit card, be sure to make smart decisions! You see how difficult it is to get approved for a card with no credit, and the last thing you need is to make your situation worse by being irresponsible with the card. Making good choices and learning financial responsibility now will earn you a much better life in the long run.
For more information on how to get your first credit card with no credit, please contact us today.