If your first job is months away, or you already have a job queue and are just waiting to get started, you might be wondering if you can apply for and qualify for a credit card before start working. You’re in luck, you have several credit card protection options before you start with 9 to 5.
Let’s take a look at how to qualify for a credit card before you start working, what types of credit cards you can qualify for, and how to improve your credit to make it easier to get a credit card before you become more successful in your career.
How to get a credit card before you start working
No matter where you are in your career, it’s important to be honest when you apply for your first credit card. As a general rule, credit card issuers will take your word for what you claim to be, and don’t require proof or investigate to confirm that you actually earn what they claim.
The Credit Card Act placed restrictions on young people’s access to credit cards, requiring them to prove they have a stable income, but even for those under 21, credit card issuers still routinely use the honor system. If you tell your credit card issuer that you are working, they may ask for your company’s phone number or proof of employment.
As tempting as it may be, don’t make up or fool around with numbers when it comes to your income, even if it could increase your credit limit. If you exaggerate your earnings on the app and then one day you get over your head and the debt becomes past due, unpaid, or you file for bankruptcy, the loan issuer has the right to sue you. In this case, your invention will be considered fraud. If you start working in a few weeks, you can use this income on your application, but don’t overstate it.
Income is only part of the qualifying process
Income is only part of the qualifying process, so if you don’t already have it, you won’t be immediately disqualified from a credit card. The credit card issuer will also check your credit history to see how you have handled any past and current loan products. This information about your past credit behavior is listed on your consumer credit reports.
Chances are your credit reports are already filled with some positive data, like a student loan in good standing or a car loan you paid on time, but when you’re young, your credit report can be pretty blank.
Credit scores derived from the financial data on your credit reports will also be included in the application process as they give the credit card issuer an idea of how much risk you pose as a borrower.
Before applying for a credit card, retrieve your credit reports from AnnualCreditReport.com for free. Credit scores typically range from 300 to 850, and the higher your number, the higher the risk the lender sees. Also, the higher your credit score, the easier it will be to qualify for loan products, higher credit limits, and lower interest rates.
Your Credit Card Options
When you are young, your credit card options may be more limited until you are able to establish your credit history and start earning a steady income. To qualify for the best paying credit cards, you need a high credit score and a high income.
That being said, there are several solid starter credit card options on the market for those who are about to or just starting their careers, and using these credit cards responsibly can really help you improve your credit score and improve your chances of getting approved in the future. the best options.
Student credit cards
Student credit cards are specifically designed for young people with thin credit files. Since these credit cards are for borrowers who are new to lending, they tend to have lower interest rates and higher interest rates. However, they can serve as a good introduction to using credit while you are in school.
Protected Credit Cards
If you don’t have an established credit profile at all, you may have to start one by taking out a secured credit card. Secure cards are similar to debit cards in that you can only spend the money you already have. They require a deposit, which you make as collateral, which serves as your line of credit.
You cannot charge more than your deposit and every time you repay your balance, your credit limit resets. After a year of responsible use of a secured card, you can most likely apply for an unsecured credit card. Since you are acting as the lender, this type of credit card is easier to get than an unsecured credit card when you are young.
Unsecured credit cards
If you already have positive credit activity on your credit reports, you may be eligible for an unsecured account that does not require a deposit. An unsecured credit card will be harder to qualify for, but if you’re starting work soon and have a steady source of income, it’s worth exploring which ones you can qualify for.
How to improve your credit score
Having a strong credit score can help balance a lower income or lack of stable income. Even before you get your first “real” job, there are several steps you can take to improve your credit score, which in turn can improve your eligibility.
- Make timely payments: The best way to improve your credit score is simply to make payments on time for any loan products in your name, such as a credit card, student loan, or car loan. Before you borrow money, make sure you can afford to make all payments on time each time they are due.
- Reduce your credit utilization ratio: Your credit utilization ratio shows how much credit you are currently using to how much credit you have. The less credit you use, the lower your credit utilization ratio will be. To keep your credit utilization ratio good and low, try to avoid having a balance on any of your existing credit cards.
- Become an authorized user: Many parents add their college-aged children as authorized users to their existing credit card accounts to help them improve their credit history. If you have a family member willing to do this for you when they add you as an authorized user, their (hopefully) timely payments will help you improve your credit score.
- Get a loan to pay rent: Typically, rent payments are not reported to credit bureaus that issue credit reports, but you can work with a rental agency to change this. These rental reporting agencies, such as Rent Reporters, Rental Kharma, and LevelCredit, will report your timely payments to credit bureaus, which can help improve your score.
- Get a loan builder loan or secured credit card: Making timely payments to a secured credit card can help you build your credit history and improve your credit score. You also have the option to apply for a loan to create a loan, which is a small loan you take out for the sole purpose of paying it back and reporting your responsible credit behavior to the credit bureaus.
bottom line
Now that you have a card, make sure you use it to add positive activity to your credit reports. This means you pay on time and send the full amount of your invoice so you never run into consumer debt. This simple two-part system can be more complicated than it looks. You will have to calculate the current amount of what you have already spent and then stop when you reach your personal limit. Do this for a year and you will be in a much better financial position than you are today.
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The editorial content on this page is based solely on the objective judgment of our contributors and is not based on advertising. It was not provided or ordered by credit card issuers. However, we may receive compensation when you click on links to our partners’ products.