Getting your first credit card can be like running through an obstacle course. You can’t get a credit card unless you already have one (preferably several), and you don’t already have one because you can’t get one in the first place. So here are six ways to improve your chance of getting your first credit card.
Get a Copy of Your Credit Report
The most common reason why it’s so hard to get a first credit card is a lack of credit history. But even if you don’t think you have any credit history – because you have no debt – you should still get a copy of your credit report.
The reason for this is that your report may still show negative information. Even though you have no formal debt arrangements, you could have an unpaid collection, or even derogatory information from an unexpected source, like a medical practice or a phone service.
Review your credit report, and if there is any negative information, either dispute it and have it removed, or pay off any outstanding balances. This will help you to move forward with a clean slate.
Open an Account With a Credit Union
Popular credit card lenders are reluctant to issue credit cards to people who have very little credit experience. But many credit unions will provide you with a credit card if you open up checking and savings accounts with them. The credit line may be small, at $500 or $1,000, but it will be a start.
Once you get the card, make a small charge and repay it. Do that each month for several months. This will help you to build a credit rating.
Look for Credit Card Companies that Favor First-timers
Some credit card lenders take a more favorable view of first-timers than others. Do your best to locate such lenders, and apply for a card through them.
Ask other people you know who are first-time credit card holders where they got their card. Also, do a web search using terms such as “credit cards for first-time users/young people/college graduates“. Just be careful what the search turns up, and always read the fine print in any offers available.
You May Need a Cosigner
Some lenders will let you add a cosigner to your application. If you go this route, be sure that you properly manage the account. Any derogatory information, such as late payments, exceeded credit limits, or unpaid balances, will also appear on the cosigner’s credit report.
Start With an Installment Loan
It’s often easier to get an installment loan than a credit card. This is particularly true if the installment loan is secured, such as by a car or a computer. You can also often make this happen by using a credit card issued by a major retailer. Once you make your purchase and make a few payments, you begin to develop a credit profile and you can then apply for major credit cards.
If All Else Fails, Apply for a Secured Credit Card
This is an arrangement in which a bank issues you a credit card that’s secured by a savings account. For example, the bank may issue you a credit card with a credit limit of $1,000. But in order to get the card, you’ll have to deposit $1,000 into a savings account.
You will be unable to access the money in the savings account since it will be held as collateral for the credit limit. But you can use the credit card to build your credit rating. The savings accounts will be released as collateral after a certain amount of time has passed and you have demonstrated a good credit history.
Use one or more of these strategies, and you’ll improve your chance of getting your first credit card.