It's been a Catch-22 dilemma, especially for young people, since
the dawn of the Credit Age. You want credit, but you can't get
credit because you've never had credit before. It's a situation
everyone faces as they begin to try to become creditworthy.
In order to qualify for a credit card, you must me at least 18
years old (or 21, if you're a permanent resident of Puerto
Rico). From then on, the rules get more complex and are subject
to interpretation by credit card issuers. In general, however,
you'll need a regular source of income or savings, so the credit
card issuer can be assured you have the ability to repay the
money. They'll also look at your credit history, which is where
most young people will begin to have difficulty, because they
don't HAVE any credit history.
If you happen to be a fulltime student when you fill out a
credit application, make sure to notate that on your form. In
many cases, credit card companies will be more lenient with
fulltime students, and will issue cards with lower credit
limits, in order to help them begin to establish a credit
history. As time goes by and you prove yourself to be a good
credit risk by paying your bills on time, you'll be able to ask
your cardholders to increase your limits.
Another good way to help credit card companies see you as a good
credit risk is to open a checking account or savings account,
especially ones with debit cards. Debit cards are similar to
credit cards, but they aren't loans. When you use the card in a
store, they swipe it through their register the same as a charge
card, but the money is automatically deducted from your checking
or savings account. Using a debit card wisely can help convince
credit card companies that you're a good credit risk.
There are some department stores that are very liberal about
issuing cards to customers. You may be able to get a card with
very little credit history--or none at all. However, you must be
careful with many store cards, because the interest rates are
often very high, sometimes 20 percent or more!
To establish a credit history using such cards, buy something
relatively inexpensive and then pay it off in several
installments. Don't pay it off completely when you get the bill
(although that's a great plan for later, because you normally
don't pay interest on charge cards if you pay them off in full
every month). Instead, pay off the item over several months, to
show that you can repay the bill on time and in full. Once
you've done that a few times, your credit history will begin to
show creditworthiness, and you can apply for lower rate cards
that can be used in a wider variety of situations.
Having a major credit card is vital in many situations, such as
renting a car, since they'll almost always ask to see a major
credit card, even if you're paying cash for the rental.
Remember, there are ways to obtain that major credit card, even
if you have no credit history. Start small and continue to be
responsible in building up your creditworthiness.
Copyright © Jeanette J. Fisher
About the author:
Jeanette
Fisher teaches six ways to build credit.
Free credit ebook "Credit
Tips for Mortgage Financing"
http://worryfreecredit.com
