What Happens if I am Declined for My First Credit Card?
When you begin your hunt for a credit card, you may begin to feel discouraged. Many Americans wonder how they will be able to get approved for a credit card if they have no type of credit history to prove that they are a reliable borrower. Often times, people will apply for credit cards that are out of their league and end up subsequently getting denied. Luckily, there are other ways to build credit without having a credit card all on your own!
The first and most important step is to understand your income. If you are under 21, in order to get approved for a credit card you must have some type of proof of income. Proof of income can be documentation like pay-stubs or income verification from your employer. Even if you have a part time job, that may be enough income to get approved for certain kinds of credit cards like student ones all on your own. If you can't provide that proof, then you will need to become an authorized user on another user’s card. You can be an authorized user on your parent’s, guardian’s or another adult’s account who is over the age of 21.
What does it mean when you become an authorized user on someone else’s credit card? Well it means that you can have the luxury of getting the benefits of using a credit card without the official financial responsibility of paying the credit card's balance. Now that is not to say that you should max out someone else's card, but because they are the official holder of the card, that responsibility falls onto them to repay. You are just an authorized user. This is a good place to start building a credit history if you have insufficient credit or bad credit. However, you need to make sure that the person who is responsible for making the payments on the account is paying them on time. If they do not pay their bill, their actions affect both of your credit scores. You also need to make sure that your authorization as a credit user is being reported by the issuer. If you are not a reported user then you will not get the benefits of the credit card!
You may not be interested in becoming an authorized user. That’s understandable because it requires a lot of trust! If a traditional credit card is not a realistic option for your financial situation then a secured credit card can be an amazing solution! A secured card requires a down deposit. This will work as a safeguard for credit companies because whatever your deposit is, that is how much the credit card line is worth! The card works similarly to a traditional credit card, and still allows you to build you credit since all activity on the card is reported to the credit bureaus.
With these options, you will be able to establish a credit score so that one day your credit is established enough to get a traditional, unsecured credit card with no issues!