Unfortunately, getting credit for the first time is often difficult, especially for young adults. After all, most lenders and credit card companies run a background check on the applicant in search of a credit score, employment history, and more. What happens when you don’t have any credit to your name at all? Well, in most cases, the applicant is denied credit if he cannot show any history of having credit in his name.
It’s a vicious cycle that often keeps newcomers to credit frustrated and without any credit cards in their wallets. Is there anything that people can do to increase their odds of getting first-time credit in the form of credit cards or installment loans when they don’t have any in their financial background? Absolutely!
How to Get First-Time Credit
Even if you don’t have any credit cards in your name, it is possible to improve your chances of getting one in the near future. First, you should establish a savings account at your local bank or credit union if you don’t already have one.
Make regular deposits into the account, even if the amount of funds that you deposit is small. Next, get yourself a checking account. Many banks offer free checking if you attach your checking account to your savings account. Plus you can usually receive your first set of checks free from the bank.
All you need is approximately $50 to start up the account. Having a checking account is essential if you want to show that you have the means to pay bills accumulated through your new credit card. If you don’t already have a job, you need to get one now. Your employment history is part of your credit report and having steady employment goes a long way to receiving first-time credit.
If you already have a job, then make the most of it and start depositing a portion of your pay check each week, even if it is only a few dollars. Now you are ready to move on to the next step toward your first ever credit card.
Apply to a local chain store such as Kohl’s, Target, or Kmart for a store credit card. Even if the store is not one that you frequently shop at, obtaining credit there is a stepping stone toward getting a first-time Visa, MasterCard, or American Express credit card. Use the store card to make a small purchase and pay the bill promptly.
If you get turned down for the store credit card, you could apply for a part-time job at the store for which you applied for the credit. Once you get hired, reapply for the store credit card after you receive your first paycheck. You’ll probably get approved for credit with the store at that point. If not, keep trying every few weeks.
Next, you need to obtain a secured credit card before applying for an unsecured one. With a secured credit card, you put down a small deposit that is used for the credit limit on the card. Each time you use the secured credit card, the amount you spend is subtracted from the remaining balance on the card until it is all used up.
Now you are ready to apply for an unsecured credit card such as a Visa, MasterCard, or American Express credit card. Most likely, as a first-time credit card holder, you are probably going to receive a low credit limit and a high interest rate. If you are turned down for credit at this point, you can try having someone cosign on the account so that you can receive your first-time credit card.
Obtaining a credit card with a major bank as a first-time credit holder may not be that easy, but with the right mindset and using the tips provided in this article, you can definitely do it!