Your First Credit Card

Everyone needs to start building credit at some point. Whether you’re in high school or college, starting out isn’t that difficult (as long as you’re at least 18 years old).

Getting approved for that first credit card can seem like an overwhelming task, but today lenders make it easier for your first time. If you have applied for a few credit cards and were turned down, don’t worry. Change your strategy and you’ll have plastic in your wallet in no time.

One of the more common mistakes that people tend to make when applying for credit cards is applying for the incorrect card that doesn’t really suit them. The major credit cards like Visa, Master Card, American Express and Discover are very difficult to come by for the first time card holder.

But finance cards are much easier to get. Finance cards are credit cards that are issued via a store or franchise and you can only use at that business. Some finance cards include Target and Best Buy.

The finance credit cards do not carry as much significance on your credit report as a major credit card will, but they are a good way to start out when establishing credit. It shows responsibility for a new card holder.  And if you still find it difficult to get a finance credit card you may want to consider a secured credit card.

Secured Cards

Secured credit cards are issued based upon a deposit you make in the amount of the credit limit. It may sound strange to some to pay $300 to get a credit limit for a $300 credit card, but a secured credit card can be a major impact on your credit report.

When applying for a secured credit card, keep two things in mind: that the card will still report your credit limit and, depending on the creditor, that the card will not show up as a secured credit card on your credit report.

Receiving a card that reports your credit limit is very important. This is because of the way credit scores are calculated. To score well, your debt ratio should be less than 30% on revolving accounts. If your secured credit card doesn’t report the credit limit, the credit report bureaus will use the total amount charged as the credit limit and this will look as though your debt ratio is 100%.

Additionally, it is extremely important to make sure your card is not reported as a secured credit card. If your credit card company reports your card as being a secured card, this will impact your credit score negatively.

Getting your first credit card can seem like a daunting task, but it isn’t. If you do your research and choose the best card for you and your lifestyle you will be approved before you know it.

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