Qualifying for Credit

When you reach the age of majority in your state — in most it’s 18 — you’re eligible for a credit card in your own name. Don’t be surprised if offers start showing up in your mailbox.

How to qualify

When you apply for a card, you’ll fill out a form asking you for identifying information — your name, address, Social Security number, and birth date — and for financial information, such as your income and assets. Based on that information, the card issuer will assess your creditworthiness — in other words, how much they trust you to pay back what you borrow. When companies evaluate you, they’re determining first if they’ll issue you a credit card at all and then your credit limit and how much you’ll pay for the use of the credit.

Getting Credit

The easiest way to get credit is to have a credit history. Using that history, card issuers can check your record to see how you’ve paid your debts in the past. If you’re finding it hard to get approved for a card because you’ve never had credit before, you might want to start with a secured credit card.

Secured cards look like regular credit cards, and you use them just like regular credit cards. But to get one, you need to keep a certain amount of money in a savings account at the bank that issues the card. That money is the security, or collateral. If you don’t make your payments, the bank uses the money in your savings account to cover the balances you owe.

After using a secured card responsibly, you’ll have established a credit history that could mean being approved for a regular credit card. But if that’s your goal in using a secured card, be sure to check with the card issuer to confirm that your card use will be reported to the major credit reporting agencies — since if the issuing company doesn’t report your good credit use, it won’t help you with other card issuers.

Before you sign up for a secured card, though, you’ll want to investigate the actual cost by comparison shopping with different issuers. You should check the annual fee you’ll pay for the card, whether there is an application fee or an activation fee, and other charges that may apply. Find out, too, if you’ll be required to purchase credit insurance and what that will cost.