If you’ve had little or no credit history and have no income, secured cards and becoming an authorized user are your best options
Dear Let’s Talk Credit,
I can hear your frustration in your letter. If you do not currently have an income, that may be why you have been denied. However, don’t worry. You do have options to begin building a positive credit history. Let’s explore them in detail.
First, I suggest you inquire at your bank about applying for a secured credit card. As you may know, the way a secured card works is that you deposit money into a separate account at the bank (usually $300-$500) and that amount is typically the credit limit on the card. You can then use the card like any other unsecured credit card.
There are a couple of things to consider when applying for a secured credit card. First, you want to be sure that the card is reported to the major credit bureaus and that it does not have high fees. Second, even the secured deposit may not be enough to qualify for a secured card if you do not have any income.
If you do not currently have an income and want to establish credit, you could consider asking your parents to add you as an authorized user on one of their credit card accounts. Another option is to apply for a joint credit card with one of your parents. The downside of using this approach is that you could damage another person’s credit if you do not use the card responsibly.
Should you have income of your own, you might consider shopping online for an unsecured credit card. Credit issuers have loosened up requirements and some banks are issuing unsecured cards to people with little credit history as long as they have adequate income.
Finally, remember to make the most of the opportunity to build a positive credit history and use your credit wisely. Make on-time and as-agreed payments each month and do not overextend yourself.
Let’s keep talking!