How to Get Your First Credit Card
Point of Interest
Getting your first credit card is exciting. However, you’ll want to keep in mind our tips on how to get a credit card, so you don’t make any mistakes.
Credit cards can help you build your credit history, learn good financial habits and even earn rewards like cash back on your purchases. However, having an open line of credit is a big responsibility. If you buy products you can’t afford or forget to pay your bill on time, you could rack up debt and damage your credit score, which is hard to rebuild.
You’ll also need to meet some eligibility requirements to get a credit card. To qualify, you need to be at least 18-years-old and have a source of income. If you don’t have much money coming in, then you may need to find a cosigner who agrees to repay your debt if you default on your credit card.
If you check off all of these requirements and think you’re ready to apply, here are some tips on how to get a credit card for the first time.
Seeking approval for your first credit card
The majority of credit card applications are successful — on average, only 14.2% of recent applicants were rejected. Still, it’s important to do your homework and choose the right credit card for your situation if you want to boost your chances of being approved.
Here are the steps you’ll need to follow to get your first credit card:
1. Understand credit scores and your credit report
Your credit score and report are used by lenders during the underwriting process to gauge your ability to handle credit. Your credit report provides a detailed overview of your financial activity, including your payment history and total outstanding debt, while your credit score is a number between 300 and 850, which shows how good or bad your credit is.
If you’ve never opened a credit account before, you won’t have a credit score because there’s nothing on your credit report. If you have a thin credit profile, it may be more difficult to qualify for credit cards, which often require good to excellent credit. However, you will still qualify for starter cards like the ones we discuss below.
2. Research “starter” cards
There are a few different types of starter credit cards that you may be able to get approved for with no credit, including student, secured, joint and store credit cards.
If you’re a college student, you may want to look into student credit cards. The student cards give you the opportunity to build credit while you’re in school and may even offer rewards like cash bonuses for good grades. Applying for a secured credit card is another option. Secured credit cards are backed by a deposit you make when you open the account. If you make your payments on time, you’ll be able to establish a positive credit history and eventually get your deposit back.
If you have limited income and credit history, you may also want to consider joint credit cards. The joint cards allow you to open an account with someone who has better credit, like a parent or spouse and share responsibility for making payments. Store credit cards are also easier to qualify for than regular general-purpose credit cards. However, the cards also come with high-interest rates and can only be used for purchases at one store, so it may not be the best option depending on your financial needs.
3. Understand your spending habits to identify card rewards you can maximize
Although the best rewards cards are usually reserved for applicants with good to excellent credit, there are some starter credit cards providing rewards. For example, the Bank of America® Cash Rewards Credit Card for Studentscomes with a 3% cash back on purchases in the category of your choice, such as off-campus dining.
To maximize your earnings, it’s important to choose a rewards card that matches your spending habits. If your spending isn’t concentrated in one area, you may want a card that allows you to earn rewards on everything you buy, like the Journey® Student Rewards from Capital One®.
4. Limit your number of applications
Applying for a new credit card can cause a small drop in your credit score. All hard inquiries are also listed on your credit report. Although the dip is temporary, it’s worth limiting the number of applications you send out to minimize the damage to your credit score.
5. Ensure you can make timely payments
Paying your bills on time is the main factor that influences your credit score, so it’s very important you make timely payments on your credit cards. Improve your chances by ensuring you don’t charge more than you can afford to your credit card, which can cause you to miss payments and rack up debt. You may also want to set up automatic payments or bill reminders so you never forget to pay your credit card.
6. Identify tools/apps that can help you
Most credit card companies offer comparison tools helping you determine which one of the cards is best for you. Bank of America, for example, has a tool allowing you to select certain cards and see the features side-by-side. This makes it easier to evaluate how cards stack up against each other.
Many credit card companies also have online tools that prequalify you for the credit card you have Interest in. When creditors prequalify you, they take a look at your basic financial information to determine if you may be a good fit for their credit card. Getting prequalified doesn’t guarantee approval, but it also doesn’t hurt your credit score and can give you a better idea of which cards are a match for you.
Mistakes to avoid when applying for a credit card
A common mistake people make when getting a credit card is applying for the first one they come across. Shopping around and comparing credit cards is important if you want to find the one with the best terms. Just because you’re shopping around, though, doesn’t mean you should apply for multiple credit cards. Applying for multiple credit cards can cause your credit score to drop and make it harder to get approved. You may also have trouble getting approved if you apply for credit cards that are out of reach based on your credit score.
If you make one of these mistakes when applying and get denied, don’t panic. Credit card issuers are required to tell you why you got denied, which can help you figure out what you need to improve before you apply for other cards. If you use the advice to improve your finances, your next application will be more successful.
The bottom line
Opening a credit card is a great way to build your credit history and learn how to manage money responsibly. If you don’t have much credit history, it can be a little harder to qualify for a credit card, especially if you don’t have a cosigner. However, if you focus on starter cards designed for people with limited credit and get prequalified before you apply, you have a good chance of being approved.