Credit cards are amazing little financial products that allow consumers to pay for expenditures without having to carry wads of cash around. They also allow consumers to buy things even before their next paycheck rolls around, all while being able to collect points just by paying with plastic at the check-out counter.
But credit cards are a lot more than just ways to spend money. They’re also effective tools that can be used to build credit from the ground up, and even repair bad credit. If you’re looking to build some solid credit and establish a healthy credit score, a credit card can be an excellent tool at your disposal. That said, credit cards must be used responsibly in order to make that happen. As soon as you start being negligent with your card, your credit rating will suffer.
It wasn’t that long ago that college students could get a slew of credit cards at the drop of a hat. It used to be super easy to get approved for a credit card, as issuers were actually handing them out to college kids without much of a financial background check at all. But these days, getting approved for a credit card is a little more intricate and requires more robust financials than what was once required a few years back.
So, when is the right time to get a credit card?
How Old Do I Have to Be to Get a Credit Card?
Being 21 years old comes with a lot of new freedoms; you are officially an adult. And being an adult also means you’re old enough to qualify for a credit card without the help of your parents. That said, just because you might be of age to get a credit card on your own doesn’t necessarily mean you should get one.
You must be responsible enough to charge only what you are able to afford and pay down your credit card balance every billing cycle. If you’re not entirely prepared, getting your first credit card could be disastrous to your credit. Once your credit has been damaged, it can take a while to bring it back up to par.
Getting a credit card for the first time under the age of 21 years is possible in some cases, particularly if the applicants are employed full-time and receive a regular income. But most credit card issuers will require their applicants to be at least this age before approving an application.
In fact, according to the 2009 Credit CARD Act, all applicants under the age of 21 will need a parent’s signature on a credit card application if they cannot prove adequate full-time income. The thing is, the majority of college kids typically don’t have the time to work 40 hours a week to qualify for this stipulation, so they’ll likely need a co-signer.
Once you’re over the age of 21, the restrictions for credit card approval are not as stringent. However, you’ll still need to prove that you’ve got some income flowing in to ensure that there is money available to make bill payments every month.
When Should I Get a Credit Card?
You might be over the legal age to have a credit card of your own, but is now the right time for you to get one? For anyone who is responsible with their money and their spending habits, the answer is probably ‘yes’.
At the end of the day, the right time to get a credit card is when you are responsible enough to use one. This applies even if you meet all the approval criteria. Basically, you will need to be financially capable of paying your bills every month and have some self-discipline not to overspend before considering applying for a traditional credit card.
That said, you should start building credit as early in adulthood as possible, but not if you are unable or unwilling to pay your credit card bills on time every month.
What About Secured Credit Cards?
If you’re unable to get approved for a conventional credit card on your own and have no desire to use a co-signer, then you might want to think about taking out a secured credit card. The earlier you can start building good credit, the better, but many circumstances might stand in the way of you getting and using a traditional credit card. In this case, a secured credit card could be a great way for you to start building your credit.
A secured card is much easier to get approved for because it requires some collateral. These cards are backed by a deposit that becomes your credit limit. Whatever amount you deposit into the card becomes the maximum amount you are able to spend against it, which serves as collateral and reduces the card issuer’s risk.
By using a secured credit card responsibly, you can build your credit and eventually be able to get approved for a traditional unsecured card to further build healthy credit.
How to Get a Credit Card For the First Time
You might be excited and anxious about getting your first credit card, but take your time when making this decision. Make sure you’ve taken the right steps before applying for one.
Make sure you’re ready – As mentioned above, it’s essential that you’re actually ready to accept the financial responsibility of having and using a credit card. If not, you might want to hold off because abusing a credit card will only hurt your credit rating. On the other hand, if you think you’ve got the financial means and the self-discipline to use the card responsibly, then this might be a great time to apply.
Find out what requirements are in place to get approved – Before you start applying for a credit card, you might want to identify exactly what it takes to get approved for one. This is especially true if you’re under the age of 21 or have just started to work and build credit. The law requires that adults under the age of 21 years must prove full-time income before getting approved for a credit card without the use of a co-signer.
Not having any credit history can also make it tough to get approved for a credit card. Like other types of loans, lenders look at a person’s credit score and credit history before agreeing to extend credit. If you don’t have any credit, you might have an issue. This is where going with a secured credit card when you’re just starting out might make more sense and may make things a lot easier for you.
Look for credit cards that are designed for newbie credit card holders – If you’re a young adult who is either still in college or just graduated and are just starting to enter the workforce, you might want to look for credit card companies that have products designed just for people like you.
Look for credit cards that are geared towards people with limited credit and income. Applying for cards that are designed for consumers with your type of credit history can boost your odds of getting approved. Don’t bother with credit cards that require stellar credit and a beefy income, because the chances of you getting denied will be a lot higher.
Here are just a few credit cards that target lower-income and low-credit applicants:
- Capital One Secured Mastercard
- Chase Freedom
- Discover it – Cashback Match
- Capital One Platinum Credit Card
- Credit One Bank Unsecured Visa for Rebuilding Credit
Final Thoughts
Having a credit card can afford you with plenty of flexibility and versatility when it comes to making expenditures, collecting points, and building solid credit. But while having a credit card is extremely helpful for your finances, it also comes with a certain set of responsibilities. While you might be of age to apply and get approved for a credit card, the best time to get one is when you’re financially responsible to use it.
