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Emancipated minor repeatedly rejected for credit card

By  |  Published: February 8, 2017

Opening Credits
Columnist Erica Sandberg
Erica Sandberg is a prominent personal finance authority and author of "Expecting Money: The Essential Financial Plan for New and Growing Families." She writes "Opening Credits," a weekly reader Q&A column about issues for people who are new to credit, for CreditCards.com.

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Question Dear Opening Credits,
I have a question about how emancipated minors can get a credit card. I have tried with several banks, but they said they don't allow that, at least not until you are 18. They said it doesn't matter whether you're emancipated or not, you still have to be of age. Can you tell me exactly which banks will allow you to get a credit card, please? – Oscar

Answer

Dear Oscar,
I’m afraid you’ve hit the allowed versus available wall. In most cases, card applicants must be at least 18 years old, since that’s the age at which a person can enter into a legally binding contract. Emancipated minors (individuals between 14 and 17 who are living independently and have completed the legal process of being freed from adult guardianship) can be exceptions, but generally face an uphill climb when trying to apply for a credit card as most major card issuers stick closely to the 18-years-old rule. 

Like all lenders, credit card issuers want to be certain that the account will be managed appropriately. As long as they’re not discriminatory, these companies are able to deny applicants based on the following factors:

  • Income. The amount of money you bring in is essential because it proves to the issuer that you have means to repay what you charge – or at the very least cover the minimum monthly payment.
  • Credit history. Even if you have an income (and you probably do, because one of the requirements for emancipation is that you are financially independent), a credit history is also important to credit issuers. Information listed on consumer credit reports is the basis for credit scores, which issuers check to determine eligibility. Without any experience having and using credit products, you’re likely going to be turned down for an unsecured card in your own name. Since you’re too young to have a credit history, chances are high that this is a major reason credit card issuers are rejecting you.

I'm not surprised you are having a hard time getting a credit issuer to give you a card. Still, you don’t have to give up quite yet. You may want to try with a credit union. For example, Navy Federal Credit Union, according to its website, says: “If you’re under the age of 21, you’ll need to show that you have an independent ability to pay, or you may need a co-signer, someone who is willing to pay your credit card debt if you can’t. If you’re under the age of 18, you may need to show that you’re an emancipated minor, or otherwise are able to legally contract.” The catch? You or a family member would have to be affiliated with the armed services in some way in order for you to become a member of that credit union.

In fact, credit unions may be your best bet, since their policies tend to be a little more forgiving than the major credit issuers. Some offer membership to people based on location (for example, your city and state), others for certain professions. Check out all that apply to you, and ask about how the credit unions deal with emancipated minors and credit cards.

Whichever credit issuer you pursue, a credit history will go a long way toward acceptance. To create one quickly, consider becoming an authorized user on a trusted family member’s credit card account.

As an authorized user, you would have access to that person's line of credit, but not the legal responsibility for repayment. The best part is that the card and its payment history will appear on your credit report, and you’ll build a credit history with it. If you do go this route, it is essential that you treat the account owner and the card with the utmost respect. Follow every charging and repayment rule the owner establishes.

Once you’ve been an authorized user for a year or so, check your credit scores. You can get a free VantageScore at My.CreditCards.com or a free FICO score from Discover. When your credit scores are in the high 600s or low 700s, you should be able to get a card on your own. After that, you can then remove yourself as an authorized user on the other card. 

If your scores aren’t quite where they should be to qualify for a regular credit card, you may have to start with a secured card, but that’s OK. Secured cards work the same way unsecured cards do, only they’re guaranteed by a cash deposit. Use your secured card responsibly and you’ll be on your way to a great credit rating before most kids are in their second year of college!

See related: 10 ways students can build good credit, Emancipated minors may get freedom, but don't count on credit

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Updated: 08-18-2017

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