Getting a credit card is like taking a step toward financial adulthood. It brings you into the world of building credit and paying bills, which almost everyone has to deal with at some point, so it can help to get started as soon as possible.
But the “firsts” of adulthood aren’t always easy, and that includes getting your first credit card. A Credit.com reader recently asked where to start:
Hi, I am 18 years of age, I have no credit history, and I have low income. I’m wanting to get my own place, and would love some help finding a good credit card to build my credit that will accept my low income.
There are three main things that will affect whether or not someone like our commenter could get a credit card: the person’s age, the fact that they have no credit and the amount of money they make.
1. Can You Get a Credit Card at 18?
Let’s start with age. Per the Credit CARD Act of 2009, consumers younger than 21 must have proof of independent income or a co-signer in order to get a credit card. It makes sense: If you’re going to get a credit card, you need to be able to show that you can pay your balance.
Why Would I Want to Have a Credit Card at 18?
Having a credit card at 18 can help you to start building your credit early. It also allows you to make purchases that may require a credit card, such as a car rental.
2. Do You Make Enough Money?
That brings us to income. Since this commenter referenced wanting to live independently, it seems unlikely that they’d opt for a co-signer. That means this person would need to provide proof of their income. We don’t know exactly what our commenter means by “my low income” — even if it’s not a lot, it isn’t necessarily a credit card deal-breaker. You could always try to ask a credit card issuer what sort of income they’re looking for among card applicants, but you may not get an adequate answer, given that there’s more that goes into getting approved for a credit card than income.
3. Consider Becoming an Authorized User
If you’re wondering how to get a credit card at 18, becoming an authorized user may be your best solution. An authorized user has permission from the cardholder to use their account to make credit card purchases. Typically, you receive a credit card with your name on it, but there might be limitations as to how much you can spend.
If the credit card company reports authorized users to the credit bureaus and the cardholder makes on-time payments, this option could help boost your credit. As an authorized user, you’re not directly responsible for making monthly credit card payments. Instead, you should make a payment agreement with the cardholder to ensure your bills are paid on time.
4. Get a Secured Credit Card
At 18, it’s likely you have little to no credit history. This factor could prevent you from obtaining a traditional credit card. Despite your lack of credit history, you could qualify for a secured credit card. This type of card requires you to pay a cash security deposit to open the account.
For example, you might need to pay a cash security deposit of $500 to open a credit card with a $500 credit limit. With secured credit cards, monthly payments are typically reported to credit reporting agencies. In many cases, you can increase your credit limit without an additional cash security deposit after several months of making on-time payments.
Get a Student Credit Card
If you’re a college student, you may qualify for a student credit card. These cards are specifically for full- and part-time students at higher education colleges or universities. Credit requirements are typically lower for student credit cards, especially when it comes to the length of credit history.
If you have little to no credit, you may have a better chance of securing a student credit card than a traditional credit card. Keep in mind that credit card companies must still adhere to the regulations of the Credit CARD Act of 2009. So, you still need to have a cosigner, have proof of income or meet other requirements for a student credit card.
5. Ask Someone to Cosign for You
Another option for obtaining a credit card at 18 is asking someone you trust to be a cosigner on the account. This method can help if your cosigner has a good credit score. Both you and the cosigner are responsible for making payments.
How to apply for a credit card at 18 with a cosigner? Unfortunately, none of the major credit card companies allow for cosigners. If you can’t find a credit card you like that allows for a cosigner, you could opt for a joint credit card account. With this type of account, both parties remain responsible for making payments, but it’s likely your cosigner will be listed as the primary cardholder on the account.
Tips to Help You Manage Your Card
Obtaining your first credit card can be exciting, but it also comes with great responsibility. How you handle your credit card purchases and payments can impact your credit score for years to come. It’s important to set up good practices now to protect your future finances.
Set Up Automatic Payments
Setting up automatic payments is a great way to ensure your bills are paid on time. You can use your credit card to pay your bills and then pay your credit card bill by the due date. This process can help you build a strong payment history, which accounts for 35% of your credit score.
Build a Budget
The best way to avoid overspending is to build a budget. Start by tracking your spending for a month and use that information to develop an accurate budget. Be sure to set some money aside each month in a savings account in case of an emergency.
Pay More Than the Minimum Payment Every Month
One of the most important things when it comes to having a credit card is to be sure you’re making at least the minimum payment every month. If possible, you can pay more than the minimum balance to avoid paying interest.
Only Buy Things You Know You Can Pay Off
When you have a credit card, it can be tempting to make large purchases that you might not be able to afford without the credit card. Avoid this temptation. If you buy things you can’t afford, you run the risk of not being able to make your monthly payments.
Late payments can have a negative impact on your credit score. Using up all of your available credit can also reduce your credit score.
Be on Top of Your Statements
It’s crucial that you take having a credit card seriously. Just as you do with your bank account, be sure to check your credit card statements carefully. Take note of how much available credit you have left to avoid going over your credit limit. You also want to make sure you make all your monthly payments on time.
Other Ways to Build Credit
There are several things you can do right now to start the path to building your credit.
- Student loans: Student loans can do more than just help you pay college tuition. They can also help you build credit. The important thing is to make sure you start paying on these loans as soon as you’re required to do so.
- Emergency fund: You’re never too young to start an emergency fund. Be sure to put a portion of your earnings into a savings account. This strategy can help you in the event of a financial emergency.
- Track your credit score: Whether you’re 18 or 80, it’s important to frequently track your credit score. Credit.com offers free credit scores from Experian that are updated every 2 weeks.
- Get a job: The easiest way to secure a credit card when you’re only 18 is to maintain a job. If you’re able to prove you can financially handle having a credit card, it’s easier to obtain approval.
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