It’s the catch-22 of credit. If you want credit, you need to already have credit. So, what can you do if you have no or a low credit score and want to apply for your first credit card?
As part of our Credit Countdown to 2018 series, here’s what you need to do before applying for your first credit card:
1 – Become an authorized user on someone’s credit card
Have a parent, relative or close friend with good credit? If so, ask them to add you as an authorized user to their credit card. If they agree, then your credit score can benefit if they have a good payment history on that account.
2 – Get a secured credit card
Secured credit cards can help you boost or build your credit score. These cards work by having you provide a refundable deposit, just as you would when renting an apartment or home. Your payment history is then reported to the credit bureaus.
3 – Do your homework
Find out what the credit card’s annual fee is, what are the late fees, what is the APR, and when that APR can change. For example, did you enroll during a promotional period? If so, then you need to know when that period ends and what the new APR will be.
4 – Pay your bills, including rent, on time
Your payment history plays a key roll when calculating your credit score, so pay all your bills on time.
With a plan, you can start building your score so that you can get your first credit card. Just remember to keep your credit utilization ratio below 30% and pay your credit card bill on time. Also, if you are one of the 100 million Americans paying rent, solutions like RentReporters can help you build and improve your credit score by reporting your on time rent payments to TransUnion.
Get ready for 2018 the right way by taking control of your credit today.
For more information on RentReporters, visit here.