Several demographics can benefit from responsible use of a credit card to help build credit. Those applying for a credit card despite a lack of credit history might include students looking to learn responsible spending and financial habits, young adults, immigrants trying to gain a financial foothold and any other beginners to the concept of credit.
Those who shouldn’t apply for a credit card include students and young adults not ready for the responsibility of a credit card and those new to credit not prepared to learn about the inherent risks and responsibilities associated with borrowing money. When borrowing with a credit card, ensure you understand the terms you agree to and know when you’ll more than likely be charged interest and other fees if you don’t pay down your balance on time, every time. Terms explaining these sorts of responsibility can be found in the cardholder agreement and vary card to card and issuer to issuer. If not prepared to manage a card responsibly, a consumer can do serious damage to personal finances and creditworthiness.
Students without credit may benefit from our list of the best cards for students with no credit. This demographic of consumer gets a leg up on others with the availability of student cards, which offer the academically-inclined an opportunity to earn typically-better rewards and receive often-more-favorable terms from their first cards.
* Young Adults
Though the 2009 CARD Act stipulates you must be at least 18 years old to become a primary account holder and if under 21 must prove independent income or provide a cosigner, young adults committed to solid financial futures should consider ways to build credit. Credit cards can be a relatively easy, inexpensive means toward this end if used responsibly and thoughtfully.
Though no one must get a credit card, it can prove useful even if rewards and other benefits are ignored. Teens younger than 18 can also become authorized users on a parent’s card and learn while under the guidance (and control) of a parent’s account. Adding an authorized user can help teens begin to build credit but do come with inherent risk. Late payments or other abuses impact the credit of all involved.
Those who have recently arrived in the U.S. may want to establish a credit history as soon as possible in order to better prepare for a strong financial future. Credit cards are a fast way to establish and build credit history to help borrow money from U.S. lenders for car leases, purchasing a house or to make progress toward reducing the cost of insurance and rent.
* Beginners to Credit
If you have no experience with credit thus far and you’re reading articles like this, you’re doing the right thing. It’s much easier to start with a blank slate and create a strong credit picture than it is to restart after making mistakes. One way to begin your credit journey is to find a solid first credit card to start using to build a history. You can also use alternatives like credit-builder loans if you don’t feel ready for a credit card account.