Reader Mail: Getting a Credit Card When You Have No Credit

Please help me be a responsible adult — namely, how do I get a goddamn credit card without any credit?

I have a steady job and a growing savings account, but I missed the credit-card-getting part of being a student. Now I’m 23, and I would like to have a credit card to use while traveling (to reduce the risk with my debit card), to build up my credit score and eventually…well, whatever people do with credit scores. (I’m certainly not buying a house or a car any time soon.) My bank (Evil Large Bank) has said they will give me a secured card, but I hate the thought of giving them $500 for 12 months for the privilege of paying them back every month. Any tips or suggestions? — K.D.

Ah, this question. It’s a Catch-22 isn’t it? To get credit, you need to have a credit history, but how can you have a credit history, if you don’t have any credit? Creditors used to just hand out credit cards like candy on Halloween, and then we got ourselves into a huge financial mess, the CARD Act of 2009 was passed, and now creditors are a little more wary before approving someone for a card. I actually dislike credit cards — it’s so easy to get yourself into debt — but having one around is good for emergency purposes, and yes, having one and being responsible with it will give you a solid credit history, which is important when you’re doing things like renting an apartment, applying for a mortgage, car loan, etc. Some employers even look at your credit history as part of their hiring process.

A secured credit card in one way to start building a credit record, and for those who don’t know how that works, it’s sort of like when you rent an apartment and you give your landlord a deposit. If you wreck your apartment, he (or she) can just pay for the damages out of your deposit. If you keep everything nice, you’ll get your deposit back. With a secured card, you have to give a deposit of at least 100 percent of your credit limit. So you’ll give your bank $500, and then they’ll give you a credit card with a limit of $500 on it. It’s totally annoying because it’s your money, and you’ll still have to make your payments each month. They just want that deposit there in case you don’t make your payments for some reason.

But you have other options besides this. You might be able to start with a store credit card (from a department store like Macy’s, or a clothing store like J. Crew or Gap). This is not ideal because store credit cards usually have high interest rates, and it’s easy to rack up a lot of debt on them, but if you don’t want to put down a deposit on a secured card and trust yourself enough to be responsible with a store credit card, I’d look into this.

Another option: Get a co-signer. This also isn’t ideal because you have to ask your parents or someone else you trust (and who trusts you) to co-sign on a card with you. This person has to agree to be liable for the account if you don’t pay. This can be a headache because you have to make sure the co-signer has good credit, and real talk, even our parents can be terrible when it comes to money.

Best of luck! I’d probably go with the secured card because having the bank hold $500 for a year sounds like no sweat to me, but now you have other things to consider.

Photo: Flickr/IvanWalsh

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