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How to Get Credit For the First Time


Credit beginners usually have but one question, “How do I get credit”? All the details about getting credit will follow, but the simple answer is, “Apply for it.”

Where to Apply For Credit

The best way for a beginner to get credit is to apply for a credit card meant for a beginner. If you already have a checking or savings account, check to see if your bank has a credit card for someone with limited credit history. If you can't get a credit card at your current bank, there are still more options.

Getting a department store credit card or an oil company credit card is easier than a major credit card, like Visa or Mastercard. While these cards are easier to get, they also have higher costs. For example, the interest rate, which is essentially the cost of carrying a credit card balance from month to month, is higher on department store and oil company credit cards. On the bright side, having a positive history with one of these cards helps you qualify for a major credit card later on. If you pay your balance in full each month (which you should) you won't have any finance charges.

You can also apply for a secured credit card. This is a type of credit card, that requires you to make a deposit to receive a credit limit on your credit card. Some secured credit cards will convert to non-secured cards after a certain period of positive credit history.

How Old Should You Be?

Typically, a person must be 18 to receive a credit card. But teenagers under 18 may be added as authorized or joint users of a credit card. Some retail stores that cater to teens might approve a credit card account for someone under 18. Major credit cards, like Visa and Mastercard typically do not offer credit to applicants that are underage.

New credit card rules go into effect February 22, 2009, will require credit card applicants under 21 to provide proof of income or have a cosigner to receive a credit card.

What to Watch Out For

Avoid making several applications for credit. Each will show up on your credit report making it appear as if you are desperate for credit.
How Credit Report Inquiries Affect Your Credit Score

Be wary of credit card offers that guarantee approval regardless of your credit history. Offers like this are usually scams that end up costing much more than you spend.
Types of Credit Cards to Avoid

Once you obtain a credit card, it will be important for you to use it wisely. These 10 Tips For Credit Card Beginners will help you start out with credit.

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