First Credit Card
Ready to start your financial life? Getting a credit card might be the best way to start your finances with the right foot, plus help you discover how they work and how to use them wisely.
Difference between your first credit card and your regular credit card
As we already know, a credit card is a financial product issued by banks, credit unions, online entities, etc., which allows you to borrow money under a line of credit. This money can be used for regular payments, purchases, services, etc.
A good first credit card usually has minimal credit requirements - because it is offered for people that do not have a solid financial background or none at all. In addition to that, these credit cards usually offer some sort of rewards, few costs or less fees than other cards, or a low APR. However, the line of credit may not be as high as you would expect for the first time. Credit Card issuers won’t take a big risk with first timers, since they are building creditworthiness from zero.
Another relevant aspect of first credit cards is that you may not be required to provide much information for eligibility. Normally, creditors will ask you to provide personal information - such as name, SSN, contact information, etc. - and information regarding your finances, expenses and income. Sometimes, they will also require employment information as well.
If you happen to be rejected for a first credit card and you need one for any reason, you can think about getting a cosigner to give more confidence to your credito about the repayment of the debt.
If you are still being rejected, becoming an authorized user of someone that already has credit and is a credit card holder can be your first option. This one will help you use a credit card as if you own one, but will not allow you to build credit. Another option - this one will help you build credit - is getting a secured credit card, which requires a deposit that will act as your credit limit.
We recommend that these products have to be used with responsibility and common sense because it is not only the first legitimate financial responsibility you will assume but also, you will start building credit for the future. If this credit starts with late payments or any sort of irregularities, this will affect your credit score and history for future references, limiting your options when trying to get other products or cards.
Identifying the right time to get your first credit card
There is no right time to get a credit card for the first time. The moment will depend on the person and their current financial situation and needs. To make sure you are in capacity to have a credit card and assume the responsibilities that come with it, check and analyze your answers to the following questions. After it, your answers will be the ones proving you that you are in the right moment or you should still work in the possibility of getting one in some other time.
✅Do you make/get enough money to afford a credit card?
✅Will you be able to afford the future monthly payments - or at least the minimum required - without missing one?
✅Does it fit in your budget after considering fees, extra costs, etc.?
✅Can you control your spendings and use the credit card wisely?
✅Do you have other payments or unpaid loans that you should take into consideration first? (fines, student debt or others)
These questions will not only help you identify that you will be able to use the credit card with responsibility but also build or remain a good credit history that will impact in your future financial decisions
Requirements to get a Credit Card for the first time
Requirements will vary depending on the credit card issuer you pick but there are some general requirements that most entities base eligibility on:
► Have any sort of income. Understanding that is your first time getting a credit card and you are probably a student or a young person, there are many types of income you can certify to the issuer. The most common one is your job income but you can also prove funds from revenue of investments, pensions, grants, scholarships, etc.
► Be at least 18 or 21. However, most issuers in reality will require you to be at least 21 unless you have a cosigner or you are just applying for a supplement of someone else’s credit card.
► Have a Social Security Number. It is necessary to provide your Social Security number to your credit card issuer if you are a U.S. citizen or a permanent resident / legal worker. For foreigners or international students, some credit card issuers will also allow you to provide an Individual Taxpayer Identification Number (ITIN) instead. This number will be seen as a guarantee for the issuer that you have a valid residency status.
► Have a physical address within the US. Applications require you to have a physical address of your home or business within the US to make sure you are contactable. P.O. Box numbers are not accepted.
Why should you get a credit card?
Even though a credit card is not an essential financial product for your everyday life as other ones - like a checking or savings bank account -, they can play an important role in the finances of your life.
Some valid reasons that people have to get a credit card for the first time are:
★To build credit history
★To start having a credit score
★To afford emergencies or unexpected expenses
★To pay for necessary large purchases
★To cover student costs (besides tuition)
★To go on vacations or school trips
Your first credit card may be the one that defines how your credit score will look like for a good while or add-up importantly to the one you already have. That is why the decision of getting a credit card, which card to pick and what issuer to choose are important decisions that you should analyze first. Start by discovering and comparing the options out there. Check requirements and make sure you have everything they need. Fill out applications wisely, only for a credit card that you are sure you want. Don’t forget to be as detailed as possible plus make sure you look like a good prospect for your credit card issuer!
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