How To Get a Credit Card For The First Time
Obtaining your first credit card is often the beginning of building your credit history, regardless of age or status in life. And if you play your cards right, that first credit card will open up a world of possibilities for you.
Making purchases with a credit card can save time and may even get you bonuses like cash back. You can utilize it to establish a solid credit history for the future if you use it responsibly.
Be well-versed in credit fundamentals before beginning the application process. You should be familiar with the inner workings of credit card interest, as well as the significance of credit scores.
After you’ve used your first card successfully, you can begin considering your alternatives. Most credit card companies won’t give you one since they can’t determine your creditworthiness if you’re just starting off. Still, you can open your very first credit card account in one of two ways.
Everything a first-time credit card applicant needs to know is below.
1. Review Your Credit Score
Creditors place a lot of value on your credit rating and report before deciding whether or not to lend to you. To put it simply, your credit score is a numeric representation of your credit report, which is a record of your financial dealings. The three major credit reporting companies are Experian, TransUnion, and Equifax.
It’s wise to verify your credit history with all three bureaus before applying for a credit card. You’re allowed one free copy of your credit report from each of the 3 major credit reporting companies once each year.
Your credit score can affect more than just the credit cards you’re offered. Credit scores often fall within the range of 300 to 850.
Factors that go into determining your credit score include the following: the length of time you’ve had credit, the types of credit you’ve used, the amounts you’ve used, the balances on any open accounts, and the frequency with which you’ve made payments. The minimum credit score required by lenders varies but is often over 670.
The more positive information is on your credit report, the easier it will be to get new credit and the highest potential interest rates. If you have an internet banking or credit card account, you can typically receive your credit score for free by logging in.
2. Consider Starter Credit Cards
If you’re over the age of 18, you’re not required to seek permission from a parent or guardian. With higher credit comes access to more favorable credit card products, and that’s what these cards are all about.
However, if you have little to no credit history, card issuers can’t see if you’re a trustworthy borrower. Because of this, all they can give you are the “safe” choices, which may not be very thrilling. Retailer cards, student cards, secured cards, and alternative credit cards for people without credit or who have poor scores are all viable choices.
Unfortunately, many credit cards marketed to those with poor credit have unfavorable terms. For instance, if a credit card has a $95 annual fee but no rewards program, it’s not worth getting, especially if it’s a secured card (where you put down money as collateral to get approved).
3. Look Into Credit Card Offers
Once you’ve settled on the general category of credit card you’re interested in, it’s time to start comparing specific cards. You should compare the benefits offered by several credit card issuers to select one that suits your needs.
If you frequently travel, for instance, it might be wise to look for a credit card that provides valuable travel advantages like airport lounge access and room upgrades. You should avoid using a credit card that has a high fee for international transactions. If you don’t do a lot of traveling, the benefits you receive as a regular cardholder may be more important to you.
Credit card offers can be attractive, but keep in mind that credit cards are a kind of borrowing with potentially damaging terms and restrictions that you should be aware of before applying. Thus, you should give some thought to which credit card will provide you with the best value before you apply for one.
4. Try to Get Pre Approved
Before applying for a credit card and having a hard inquiry made on your credit, some issuers let you get preapproved so you know what your acceptance odds are. In order to establish your preapproval, the card issuer may still evaluate your credit history, score, earnings, and other financial factors.
Apply for the credit card that best fits your needs. You may find out if you are preapproved for a credit card by either applying for one directly or by visiting the website of the credit card company.
Local credit cards from credit unions and nearby banks should not be ignored. Some of these cards may be easier to get than those from large issuers, particularly if you have an existing account with the issuing bank.
You should carefully weigh your purchasing habits, approval chances, the convenience of branch locations, and the anticipated length of card use before deciding on a particular credit card offer.
After deciding on a card, whether it’s available exclusively online or not, you can submit an application. Get your information together, like your social security number, and have it ready to hand over. Include all income when calculating your debt-to-income ratio, which is used to determine your creditworthiness.
But since the internet has made applying for a credit card much simpler, the majority of card issuers have websites where an application can be filled out online and submitted. Approval is usually given within minutes, but it could take up to a few days. The issuer is obligated to give you a rationale for the denial if it comes to that.
If your application is successful, you will be contacted and a card will also be mailed to you. Virtual card numbers are typically readily accessible on mobile devices and online, as are the details of your card deal.
How Can I Increase the Approval Chances for My First Credit Card?
There are a few things you can do to boost your chances of getting approved for your first credit card:
- Work on raising your credit score. To boost your rate of acceptance for your application, it is best to improve your credit score. If your credit isn’t perfect, you should only choose those credit cards that meet your score range.
If you want to increase the odds of getting your credit card application approved, then you should try looking into options that don’t rely only on your credit score.
- Minimize the total number of applications. Don’t go crazy applying for credit cards all at once. Credit scores might take a hit if they are checked too frequently and by too many lenders.
At first glance, it could seem like you’re having trouble getting accepted or are ready to incur further debt. Those are what the industry calls “hard” queries because they have a significant impact on your credit score.
Checking your own credit report, letting a potential employer browse your record, or getting pre-approved for a loan from a bank or credit union are all types of “soft” inquiries that do not result in the same negative impact.
Instead of signing up for a bunch of credit cards all at once, apply for only the ones you know you’ll get approved for depending on your credit history and score.
- Prove that you are capable of making credit card installments. Credit card applications typically require proof of income before approval is granted. As a component of the application process, credit card providers may also inquire about your monthly living costs.
Even if you are under 21, you may be eligible to apply for a student credit card by yourself if you can prove that you have a stable source of income.
In the event of a denial, you can inquire further with the issuer about the reasons for the denial and any steps you might take to increase your chances of acceptance in the future.
How to Use Your First Credit Card Wisely
Once you’ve obtained a credit card, you should make it a priority to develop responsible use practices. Read on for some tips on making the most of your credit card.
- Don’t spend more than you can pay. Spending heavily on a credit card can quickly rack up reward points, but only if you guarantee you can pay off the balance in full each month.
- Never go into debt without a solid strategy. If you absolutely must owe a balance, do so only with a credible strategy for paying it off quickly, preferably before the interest and fees add up and the debt becomes unmanageable.
- Keep a running tally of your monthly expenses. Always remember to write down your monthly expenditures so that you can avoid any unpleasant surprises. Manual methods include a notebook or spreadsheet, while specialized apps exist to assist with this task.
However, all major banks and credit card issuers now offer mobile apps that connect to your account and make it simple to analyze your spending.
When utilized sensibly, credit cards can be a handy way to access different financial services. And as it is wonderful to obtain your first-ever credit card, you must ensure it best suits your needs and credit records based on terms and interest rates.
Also, remember to maintain exemplary credit behavior once you’ve got your card in hand. Making timely payments is the most crucial move you can do to enhance your credit score.
Do your homework prior to proceeding with your credit card application, as this decision might impact your credit rating in the years to come.