Dear Savvy,
I am 24-years old, employed, rent an apartment, and am a college graduate. I do not have a credit card — I have used a debit card for the last eight years or so. I recently applied to get a MasterCard but was rejected on the basis of not having enough credit references. But how can I get good credit if I don't have a credit card?
I wrote back asking for them to reconsider their rejection, saying that I am looking to establish credit and that I do not have bad credit (I checked my credit report) — simply no credit. I was rejected again. What's the next step? Will I ever be approved for a credit card?
To see my answer, read more.
Savvy says: Try and see things from the perspective of the credit card company. The only way they can evaluate a potential borrower's credit worthiness is to review credit history, and if there's no history to speak of, the company doesn't have any reason to trust that you'll use a card responsibly. The good news: you can start working toward establishing legitimate credit within a year.
Apply for a secured credit card, which works differently than a regular card. Instead of the company giving you a predetermined limit, you're required to deposit money and your credit limit is equal to that deposit or a percentage above that amount. If you use a credit union, ask about secured credit products before checking out other sources. Otherwise, search Bankrate's list of secured credit issuers (go for one with low fees) and make sure the issuer you choose reports to the credit bureaus.
As long as you've shown discipline with your secured card, the issuer will qualify you for a regular credit card after about a year of punctual payments. Keep in mind that because secured cards typically have high interest rates, you shouldn't keep it longer than necessary. As with any card, be sure to understand all fees involved before opening an account.
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OMG I am in the same position! Except I am still in college, but I am currently co-oping and make over 60K a year! I just got a target card, to start buidling my credit, but i didn't even get approved for the target visa card, just the red card. its soo frustrating!
1I had the same problem a few years ago. After getting rejected for the "good" credit cards, I applied for a crappy Capital One card (no rewards) and got a $300 credit limit. After a few mos. of paying off my balances in full every month, I eventually established a credit history and got accepted for a couple good rewards cards. Now I have about $10,000 in credit limits at my disposal. Not that I need it, but it's really built up my credit score!
2I should add...make sure you get a card w/ no annual fee for your starter card. Trust me, they're out there.
3i started by getting a store card first.i got a macy's card and then i was able to get credit cards.
4i would suggest a store card for a few months and to also try the financial institution where you have your checking/savings. your credit union or bank would have more of a relationship with you already and might be more able to help you with a credit card, even if it has a small limit.
5Store cards to start. Also, make sure your bills are in your name (cell phone, insurance, etc.) so they can see a history of on time payments.
Another trick is if you have a parent or other relative who's willing, have them get a card on their account in your name and don't use it. You will benefit just by being on the same account as an established credit holder.
6I think with some debit cards if they have a Visa or MasterCard affiliation, you can use them as credit cards and build credit. when i figured out you coudl do that, I started. when the swipe thing at stores asks if its debit or credit, say credit!
7wow, US has been hit hard... here in UK I went to my bank asked for overdraft AND credit card and I was holding contracts for both in 20min, and I was 21 at the time. international student at that.
8I'm in the same boat, although I have some medical bills I'm paying off and I have never done the college thing so I don't have loans to pay off. I found out a while ago that you could get a secured card, but I'm waiting on that since I'm on a tight budget.
9I'm in a similar situation.Bank of America is offering me a secured card with $30 annual fee. Should I go in for this or the Capital One?
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