It doesn’t seem fair. You’ve avoided temptation and refrained from spending all your money on frivolous pursuits. And you’ve worked hard to graduate from high school. Or get into college. Or get certified in a certain vocation. Or even complete your higher education and earn a two-year or four-year degree.
But, because you don’t have much of a (or any) credit history, you’re still not getting any love from credit card companies. Come on! Can’t anyone give a young guy (or girl) a little credit?
Obtaining your first credit card can be challenging, especially during uncertain economic times. However, there are certain strategies you can embrace that can make this process easier.
Are You Prepared?
First and foremost, you need to be sure that you’re actually ready to have a credit card in your wallet or purse. That means familiarizing yourself with everything from what interest rates and grace periods mean to which factors impact your minimum payments, credit score, and credit utilization. Above all, you have to be mature enough to make your monthly payments on time, keep your balance as low as possible, and resist the urge to make unnecessary or expensive purchases.
Keep Your Options Open
Once you begin your credit card quest, keep in mind that you needn’t limit your search to big names like Visa, MasterCard, and American Express. For many people, it’s easier to qualify for a credit card from a gasoline company, home improvement chain, or apparel retailer. Though its scope is limited, this type of card can serve as an excellent “gateway” card – and will also help you build credit, too.
Another option to help create a solid credit history is what is known as a secured credit card.These cards require a cash deposit as collateral in lieu of income or other assets. Unlike prepaid debit cards, the cash deposit doesn’t get reduced each time you use the card. It’s only there to help guarantee that you make your payments on time.
Make Your Bank Work For You
If you’ve been using a particular bank (or credit union) for a number of years, you should see if the institution will offer you a credit card as well. After all, the bank knows your financial history and, if you haven’t overdrawn your account very often, the bank may deem you responsible enough for a credit card. One tip: Visit a bank branch in person instead of filling out an application online, because you may be able to talk with someone who has the direct authority to approve your credit application.
Perseverance is Key
When browsing through the jungle of credit card offers out there, look for cards that cater to students (if you are enrolled in school) or people with “limited” or “moderate” credit. Those are the types of deals that are more likely to target first-time cardholders. Note: When possible, avoid “bad credit” or “subprime” card offers: Those are designed for Americans with poor credit and often carry high interest rates and fees.
It’s wise to adopt a “wide net” strategy when applying for your first credit card. The more applications you submit, the better your odds are of getting approved (You don’t have to accept all of their offers). And don’t just toss out the denial letters you get. Companies are required to inform you why you were denied credit, these denials can give you clues about how to tweak your application strategies.
Since acquiring a credit card can sometimes be a lengthy process, be sure to keep your eyes on the prize. That means not giving up if you receive several denials, because, if you’re building credit, you could qualify for a card you were turned down for if you reapply six or twelve months later. Finally, continue to take steps to bolster your credit history by paying your bills on time, getting good grades, or getting a part-time job to begin earning income.
