When new to credit, top rewards cards may be out of reach

Opening Credits columnist Eric 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.

Ask a question.

Dear Opening Credits,
I am looking to get my first credit card. I am currently a full-time student, but will be graduating in December. I would like to travel when I graduate. I would like to open a credit card to start earning points toward travel rewards now.

I have looked up my credit score using two free sites, which reported my score as 703 and 712. I have done some research and the best travel rewards cards seem to be the Chase Sapphire Preferred and the Barclaycard Arrival. With a short credit history consisting almost entirely of student loans, and as a first-time applicant, I do not know if either of these will be good choices for me, or if I even have a chance at getting approved.

Furthermore, since I don't currently spend money on travel, would it be wiser to apply for a general rewards card and later open a travel card and transfer the points? I have also heard that there are so many cards that don't have an annual fee, that I should avoid cards that have them. Sorry for all the questions, but I am feeling a bit overwhelmed with all of the options! -- Kylie


Dear Kylie,
Shopping for plastic can be a little like trying to decide on what to order at a restaurant with a particularly large menu. What should you order when so much looks delicious? And which dishes are best for you? Time to narrow down the choices!

I love that you want to start with the best card right from the beginning. It's great that you appreciate the benefits of a premium product. Many cards come with travel-related perks, such as the ability to earn points for free trips, free checked bags and priority boarding. A few even open the doors to VIP airport lounges all over the world.

To qualify for such wondrous cards, though, you'll have to meet the credit issuer's standards. Here's what they look for in a cardholder:

High credit scores. Issuers use FICO scores to determine an applicant's risk level. These scores start at a low of 300 and top out at 850. Assuming the free scores you got  use that same range, and it's accurate, you are in the "good" range between 700 and 749. And I must commend you because even though you're just starting out, they are impressive. You must have been treating your financial obligations well, perhaps by paying an unsubsidized portion of your student loans on time or keeping a car loan in positive standing.

Unfortunately, your scores are not high enough to qualify for the credit cards you've identified. In fact, they would have to be in the best scoring category, which is called "excellent," of 750 and above. Since your digits are a little short, I would avoid applying for these cards. Chances are you'll get the "sorry, try again later" message -- along with a small credit score deduction that is a byproduct of applying for credit.

Sufficient income. Issuers don't usually publish exact income requirements for each credit card, but what you make is certainly a factor in approval. If the card has a very low limit, you probably won't need to be earning much, but if it's a large limit you most likely do.

Both of the cards you mentioned offer credit lines that start in the thousands, so they would require an income that can support the type of debt you can get into. To qualify, you'll first need to secure a well-paying job and hold it for at least a year.

If it sounds like I'm dissuading you from trying for these accounts, I'm not. You just need to delay your application until you're in a more-attractive position.

In the meantime (and after you get a job), start with a card that is within reach. There are plenty of fantastic accounts available to people with scores like yours.

Because you're not traveling immediately, you may as well go for a more general rewards card for which you already qualify, so you can earn points for cash back plus travel perks. And yes, avoid cards with annual fees.

After you have a card, use it perfectly for a year. That means charging on a regular basis, but paying your bill in full and on time every month. By doing so, your scores will rise, points will accumulate and the odds of you being approved for even more desirable accounts escalate. Then you can put the credit menu down and concentrate on managing both accounts, reaping the rewards each provides.

See related: When you can, can't transfer reward points, Credit card application rejected? 3 steps to getting the next one approved

Meet CreditCards.com's reader Q&A experts

Does a personal finance problem have you worried? Monday through Saturday, CreditCards.com's Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.


Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on CreditCards.com is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.

Updated: 01-16-2019