I want to talk about is getting your first credit card, you can be young, you can be old, it does not matter. Getting your first credit card is a big deal.
I really wanted to talk about this topic as I get a lot of questions from people who may not have credit cards. Again, as long as you're over 18 it has no age requirement.
I'm going to give you my experiences and how I got my first credit card, how it benefits me today, and how you can get approved for your first credit card.
Let's get into it. So the first thing I always like to do is; have a game plan.
I want to make sure the person in this situation or the person who wants a credit card are 100% ready to get a credit card.
Credit Cards Are Commitment & Dedication:
You have to really be punctual, if you really want to have a credit card work for you and really improve your credit score.
So let's make sure we're ready. We're committed to getting the credit card.
We have to make sure that we're really ready to do everything that we have to do to maintain a good relationship with the bank that we're going to lend from because it's very important.
So that's the first step, making sure you are ready you are committed.
That's that's a really good step. The second thing about being ready is we want to make sure we have some income coming in, it's usually a lot harder to get a credit card without any income coming in.
Typically, banks want to see income from yourself. So if you're employed, very young, I know people who are younger are in school so it can be part time, full time, some type of income coming in from you.
If you are signing on the credit card by yourself (meaning that nobody else is going to be on the credit card with you), let's just make sure we're ready for the commitment, and make sure we have the income to get the credit card.
Credit Cards & Your Income:
Income is definitely an important factor. If you don't have the income, then there is no way that a bank will be able to approve you for any credit card because you have nothing to pay the credit card back with! 🙂
You want to make sure you are not a risk to them and their money. So income is very important. So here's my story with credit cards.
When I was younger, about the age 21, I was always trying to get, you know, my own phone plan, looking at cars as a first time buyer, and I would never have any luck getting these things because I didn't have credit.
And for example, I tried to get a phone contract, and tried to get approved for a lot of credit. But because I didn't have any previous credit I had to pay the full price on the phone.
They did not trust me because I didn't have any credit history. And I know everybody says: “Well, I pay my bills on time.”
If that doesn't reflect on your credit score, where you have no credit, it's not going to show up in our system. It is what it is, unfortunately, even if you are somebody who pays all their bills on time, if it's not improving your credit score then there's no history to it.
So that's the downfall to it. But we're here to fix that and we have a way around that. So that's my story, and obviously I found a way to get around that and I'm happy to share this with you.
So let me get into the two options that I will definitely suggest when you getting your first credit card. My favorite one to be honest is; secured credit cards.
2 Options To Get A Credit Card:
I love the secure credit card method, it is good for you and is in your best interest.
It is good for the bank and it is in their best interest.
A secured credit card is just like a credit card you won't be able to tell the difference between a secured credit card and a regular credit card.
So there's no shame with walk around with this card. I actually took out a secured credit card my first time because I had no luck with any other credit card companies.
Nobody wanted me because I didn't have any credit history. You give them a deposit down and what they're asking for.
So let's say for example, they want 300 down and they will give you in return. What you would do is you would give them 300 they will put that 300 in a savings account that you can access and your credit limit will be 300.
Typically some of the credit cards they'll say okay, give us 200 or more and whatever you give us we will match you that with a credit line.
So if you give them 1000 they're going to give you an 1000 credit line.
Now for the first six months to a year, you are going to use that card and only under 20%. Honestly when you got a secure credit card I'm even saying stay under 10%. Put a very small purchase on it. Go to subway, wherever you eat and spend 5 or 10 on it.
Purchase and pay it off quick. Don't use it again until the next month.
I was making very small purchases fuel for 20 a month. I was just putting on my 20 bucks for 1 month and you know…
After a year my credit score was a pretty decent. I was very surprised I was in the 700's just by only putting a small purchase per month. I kept my utilization under 10% which is extremely good and I was paying my bill on time.
They were amazed and loved it, they extended me an offer for a better credit card, and then they give you your money back.
So after that year, six months to a year – they give you the money back that you gave to them.
Then they give you a credit line for that amount without the actual money so they trust you now. They give you a unsecured credit card because that's what it's called.
The second option is student credit cards. Now I know everybody reading this may not be a student. So this is more aimed towards students.
Sometimes again, I didn't have any luck with it, but there are some credit cards that give you an advantage because you're student. They know you are in college, you may not have the best credit score, they want to help you.
They're going to give you a credit card with probably a small limit just to get you started. Interest rates maybe a little higher than normal and to get you going they kind of aim towards people with no credit or very small credit history.
Those are my two options for credit cards. And we went over the two options on getting approved for your first card.
Credit Cards You Must Stay Away From:
We need to stay away from retail cards.
Let's say any retail store you may like, they may have their own credit card. Stay away from those in my opinion. I don't like those cards.
They are really high interest rates, typically 29% to 30% when an average credit card is usually a lot lower.
I know it's really tempting when you're at your favorite store, it's very tempting, but you're going to get ahead of yourself. I don't want you to get into the debt habit and then before you know it, you're maxed out.
So stay away from retail cards. I gave you really two great options. The best option, in my opinion is the secure credit card, teaching yourself how to maintain your utilization and you're giving the bank the option to actually trust you.
I hope you enjoyed this post, it's a very big step so make sure you choose the credit card that's right for you.