Let’s say you started your first job and you want to open a credit card, but you don’t have a credit score yet—or you do have one, but it’s low. What do you do? Luckily, there are several alternatives.
First, get a job
Having a job is an important factor in getting approved for a credit card. When applying for a card, the financial institution will first look at your credit score and your income.
You don’t always need a job to qualify for one, but you do need to show that you’re able to repay your credit card balance at the end of each month. Showing that you have a steady income is an essential qualifying factor. Typically, the higher your income, the larger your credit limit will be.
Based on your income and your credit history, the bank will be able to make a determination about what they are willing to give you. According to Taylor Tepper, a former writer and analyst at Bankrate.com, you most likely won’t qualify for those high-rewards cards if you’re a first time credit card holder. “The card they’ll offer you will probably have a low credit balance that will limit how much money you can spend on it.”
Apply for a student credit card
Getting a credit card designed for college students can be the first step to building a good credit score. Make sure to look at annual fees and interest rates before starting the application process. Also, check with your local credit union for card offers. While smaller and local banks usually have higher interest rates, they’re also more likely to accept your application.
Get a secured credit card
With a secured credit card, you deposit the money that then acts as your credit limit. When choosing a card, make sure you pay attention to application fees, processing fees, and annual fees. Cards with high fees can significantly eat into your credit limit.
“I’m partial to secured credit cards, especially for people who have no real credit history—even if they have a job with a decent income. I think it’s a good way to get into the credit space without doing damage,” said Tepper.
Even thought many sites discuss the best secured credit cards, you have a lot of things to consider when choosing one. Tepper recommends focusing less on rewards perks and more on no annual fee and the lowest possible APR. “Look at local credit unions—they will probably have lower fee products in terms of APR, lower interest rates and no annual fee.”
Consider applying with a cosigner
Applying with a cosigner is one option to consider if you’re under 21. By submitting an application with a cosigner—a parent, spouse or household member—you’ll benefit from their good credit score and history.
Keep in mind, however, that your cosigner will have access to your account and will be able to see your purchases and transactions. This might be helpful to you—you can count on that person to remind you to pay your balance on time, and even help you financially, depending on your relationship.
Don’t keep applying if you don’t get approved
If you don’t get approved for a student credit card or a secured one, don’t keep applying, because each application will affect your credit score negatively for a short while.
To avoid getting rejected, do your research ahead of time to see which card best fits your needs and your current financial situation.
You might just automatically apply to get a credit card with the same bank where you have your checking account. Instead, think of finding the right card as finding the product that best fits you. “You can’t think in terms of banks—you have to think in terms of products,” said Tepper. There’s no real advantage to using the same bank you grew up with; more importantly, do your research and find which card is right for you.
If you don’t get approved, the card issuer will send you a letter and tell you why. “It probably means that you applied for a card that has too many rewards, something meant for higher income or people with a longer credit history,” said Tepper.
This post was originally published in 2018 and was updated on May 14, 2020. Updates include the following: Checked links for accuracy and added additional resources, updated formatting to reflect current style, changed feature image, revised paragraph order in last section.