Getting strong credit is one of the most important tasks in a young person’s life. In our increasingly cashless society, showing that you can use a credit card responsibly is a step on the road to financial independence. The sooner you start, the sooner you can establish your creditworthiness. That said, the minimum age to be the primary cardholder for most card issuers is 18, although getting a credit card before age 21 is not always straightforward.
Below, we discuss some of the essentials for new credit applicants, including the minimum age to have your own card, and review several of the best cards available for young cardholders.
How old do you have to be to get a credit card?
The general rule for the credit card industry is that cardholders must be at least 18 years of age. However, if you are under the age of 21 and have no credit history or have a poor credit history, most credit card issuers will ask you to prove that you can. pay your bills independently. For example, they may ask for proof of regular employment or investment income.
Alternatively, you can apply with a co-signer, such as a parent, legal guardian, spouse, or other person over the age of 21 who has the capacity to pay credit card bills. It is important that you and your co-signer understand that you share equal legal responsibility for reimbursing the card, even if you are the only one using it.
You can also consider secured credit cards, which require you to deposit a security deposit that sets the card’s credit limit. Because of the deposit, it’s easier to get approved for a secure credit card than other credit cards, and you can get one on your own at 18.
If you are under 18, you can become an authorized user
Another alternative for a young person trying to create credit is to become an authorized user on the credit card of a parent, guardian or family member. As with standard credit cards, the minimum age of authorized users varies by issuer. Typical minimum ages range from 13 to 16, although some issuers do not have a minimum age.
Being an authorized user is significantly different from being a co-signer. Although an authorized user has access to the account and the credit limit, unlike a co-signer, they have no obligation to pay the outstanding balance on the card. Many credit issuers report authorized users to the credit bureaus, which means that your credit score will likely benefit from being an authorized user. That being said, if the primary cardholder themselves have bad credit habits, such as a history of late or missed payments or high credit utilization, their choices may be negatively impacting your credit score. credit.
Best Starter Credit Cards
As you begin to build your credit history, think about how you’ll use your card, and look for cards that have features that match your spending habits (and perhaps more importantly, your payment habits). Cards with no annual fee are usually a good place to start.
You should plan to pay off your full balance each month. But if you’re concerned about your ability to do so, look for cards with low annual percentage rates (APRs). Many issuers also offer welcome bonuses or rewards programs to entice their cardholders.
Capital One’s Journey Student Rewards: Ideal for Students
- Rewards: Get unlimited 1% cash back on all your purchases, pay on time to increase your cash back to a total of 1.25% for this month
- Welcome Bonus: Up to $ 60 in 12 monthly streaming service credits (earned in first 18 months).
- Annual fee: $ 0.
- APR: variable of 26.99 percent.
- Credit required: fair to good.
Capital One’s Journey Student Rewards card is ideal for students as it encourages building a good credit history by rewarding on-time payments. In addition to an additional 0.25% cash back when you pay your bill on time, you may also be entitled to $ 5 per month (up to $ 60 per year, during your first 18 months of ownership. card) into statement credits for certain streaming subscriptions for payment. your bill on time.
The card is intended for new creditors, as well as students with fair credit. Initially, your credit limit may be slightly lower than that of other cards. But Capital One will review your eligibility for a line of credit increase after the first six months.
Discover itÂ® Secure Credit Card: The Best Secure Credit Card
- Rewards: Get 2% back on gas station and restaurant fees on up to $ 1,000 in combined spending each quarter (then 1%) and 1% on other purchases.
- Welcome Bonus: Discover is your cash back earned at the end of your first year as a cardholder.
- Annual fee: $ 0.
- APR: variable 22.99 percent.
- Credit Required: No credit history
With no annual fees or cash back, the Discover itÂ® secure credit card is a good choice for new credit applicants. You will need to deposit a cash deposit, but with this you may have a better chance of being approved as a first-time cardholder or someone with little credit history. Deposits start as low as $ 200 and are returned when you close or upgrade the account. The Discover itÂ® Secure Credit Card also has lower fees than many other cards, including no late fees on your first late payment (after that, up to $ 40), and you get access to your FICO score for free on your statement every month. .
OpenSkyÂ® Secured VisaÂ® Credit Card: Ideal for No Credit Check
- Rewards: none.
- Welcome bonus: none.
- Annual fee: $ 35.
- APR: variable of 17.39 percent.
- Credit required: None.
The OpenSkyÂ® Secured VisaÂ® credit card does not require a credit check, so it is a great option for those with little or even poor credit history. As a secured credit card, it requires a cash deposit to start, but you can get a line of credit of up to $ 3,000. The OpenSky Secured card helps you build your credit score by reporting your payments to the three major credit bureaus. That said, if you already have a good credit history, you may want to consider other secured cards, due to the $ 35 annual fee and lack of rewards.
How to start building credit
Once you have a card, you need to use it responsibly. Getting started with good credit habits can help you build your credit score in no time. Keep in mind the main factors that credit bureaus will take into account when determining your credit score: payment history, credit usage, credit age, credit composition, and number and age of credit applications.
When you’re new to credit, it can be tempting to splurge on your newly available funds. However, it’s important to only spend what you can afford to avoid going into debt on a credit card. By using your credit card only for purchases, you know you can pay off at the end of the month, keeping your credit usage (the amount of your available credit that you are using) between 10% and 30%, and paying your bill. on time and in full, here are some of the most important things you can do to maintain your credit score.
While there are benefits to having multiple credit cards, every time you apply for a credit card the issuer will perform a credit check. Having too many serious requests on your credit report in a short period of time can be a red flag for lenders, so it’s important to space out your card requests for at least three to six months. Start with one card and work on building up your credit before applying for another. Taking the time to develop a good to great credit score will open up a whole new level of credit cards with better rewards, better rates, and better welcome bonuses.
The bottom line
The age of 18 opens the door to a number of new financial opportunities with credit. Whether you are applying for a starter credit card, a secured card with a deposit, or requesting to be an authorized user on someone else’s account, be sure to use your credit responsibly and be diligent. to make your payments on time. Learning good financial habits now will put you on the right foot for great credit and even more opportunities in the future.