The idea of getting all these amazing cards and amazing trips is pretty tantalizing, isn’t it? The only problem – how can you get approved for a credit card if you have no credit?! And how can you get credit if you can’t get approved for a credit card? It’s this weird bamboozling paradox that leaves some people in limbo, trying to get approved for anything good with somewhat-decent rewards, but feeling frustrated in the process. We’re here to help. Here’s what you should do if you are a beginner with either 1) no credit history, or 2) bad credit.
How can I get a good card and improve my score?
Hey, we all start somewhere. Whether you’re a student or just someone who was indoctrinated that credit cards are bad (thanks for coming to the light!), we have some good recommendations for you. Now, your first credit card is going to be a trial run – it’s for you to realize how cards work, how to pay it off, etc. As soon as the bank sees you can handle a tiiiiiny amount of credit, they’ll open their coffers of points up for you to swim around in like Scrooge McDuck.
Before you get a card, read our Beginner’s Guide since that explains effective credit card use, what makes up a credit score, etc. Remember, it’s likely that you won’t be able to get a great points-earning card right away, the goal is just to GET one! Then, in 6 months to a year, you can start getting the premium ones that will fund your new traveling lifestyle.
Credit Card Recommendations
- Chase Freedom. This (and the one below, the Freedom Unlimited) is probably my favorite starter card because it combines good categories with a good starting bonus. No annual fee, 15k UR ($150) bonus, and only $500 spending requirement in 3 months. The Freedom has rotating 5% categories like gas, groceries, Amazon, etc., so it’s nice to build up points early on. While you need a premium Chase card (Sapphire Preferred/Reserve or Ink Preferred) to be able to transfer points to travel partners and use the Chase Portal, you can hold on to the UR points that your Freedom earns and transfer them to yourself if you ever get a “premium” Chase card. You can also transfer them now to a spouse/family member who already has a premium card. You can read more about the card benefits here, and apply using our referral link here.
- Chase Freedom Unlimited. This is the other top card for beginners, because it (like the Freedom) earns UR points, has no annual fee, and has a good bonus – 15k UR ($150) after only $500 spend. The Freedom is less complex in its earning structure, since it earns 1.5 UR points for every dollar purchased. UR points can be redeemed for cash (meaning this is a 1.5% earning card) or they can be combined with someone who has a “premium” Chase card (like you a year from now!) and used for travel. You can read more about the card benefits here, and apply using our referral link here.
- Discover IT. This is probably the easiest points-earning card on this list to get approved for. Discover isn’t the most widely-accepted brand, but it is in 95% of places. Discover has amazing customer service, is great for beginners, and the rewards are actually pretty awesome. It gets 5% back in rotating categories every quarter (like gas, Amazon, grocery, etc.), but Discover actually DOUBLES everything you earn in your first year, meaning that you’re actually getting 10% back! You can read about and apply for the Discover It here.
- Citi ThankYou Preferred for Students. This is a pretty good starter card for students. The bonus is only $25 and it only earns 2x on restaurant and entertainment, which is why it is ranked lower at #4. The other downside to this card is that Citi has restrictions on bonuses based on the “family” the card is in – so you won’t be able to get a bonus for any of the “premier” Citi ThankYou cards (Premier / Preferred / Prestige) for 24 months after opening or closing the card. So only get this if you have no plans to get any of those in the near future! You can read more about the card and apply here.
- Capital One Journey for Students. I really hesitate to even put this one on here, because it has no bonus and isn’t that great in terms of earning, but it’s a good student card and one of the few ones without foreign transaction fees. I personally don’t think that is too big of a deal since the purpose of your first card is to build credit, not be your long-term traveling card. Additionally, if you’re really worried about foreign transaction fees I would just get a Schwab Checking Account (since they reimburse all foreign ATM fees and don’t charge you anything for non-Schwab ATMs). However, if your heart is really set on a beginner card with no foreign exchange fees, then this is probably the right one for you! Read more about it and apply here.
- Any card from your local bank or credit union. It won’t be sexy, but it will get the job done. They might give you a super small limit ($200) or so, the goal here is just to put even a few dollars (a sandwich or something) of spend on it a month, and pay it off completely. You are showing the bank good habits. They also might give you a secured card, which you can read about here.
So those are my top recommendations as far as cards go. The top priority is just building your score (since you won’t ever be able to get a mortgage or a car loan otherwise!), but getting bonus points is just the cherry on top. If you have any questions, don’t hesitate to email us at firstname.lastname@example.org.
Other Tips/Tricks for Beginners or “Rebuilders”
- Can you use a family member’s score to help your score? You can! Add yourself as an AU (Authorized User) on someone’s card who has a great credit score. Do your parents have a 28 year old credit card with Bank of America and have credit scores of 820? Adding yourself as an Authorized User on their account will improve your score a ton, since the Credit Bureaus will factor that in to your score. You won’t get the exact 820 score that they have, but it’ll help. The only caveat to this is that it WILL count against how many cards you have (i.e. the Chase 5/24 rule explained in the FAQ.
- What do you put as your income? Obviously putting a higher income is likely to get you approved. Obviously you count your own earnings (from a student job or whatever) but what else can you put? You can include any income available to you to pay off purchases. If your parents give you an allowance, if you have student loans or grants, etc. that can all be counted. I certainly don’t recommend putting your FULL parents’ salary, but you can include that if they (hypothetically) would be able to help you and you are part of their “household”. You don’t have to do this, but I find it helps most people get approved. For Mary and I, bankers have always told me to use our COMBINED household income since we buy things as a household, not individually – so this is straight from them! Just remember though, a $5k credit limit does NOT MEAN YOU GET TO SPEND $5k. It means you get to spend exactly what you do normally in cash or on a debit card. DO NOT SPEND MONEY YOU DO NOT HAVE. Please don’t get into debt. I’ll never forgive myself if you do.
- How do I track purchases? Start using Mint.com immediately to track all of your spending. Yes – it links to your credit cards and your bank account. Yes – it is 100% safe. I love using cards BECAUSE it links to Mint and I can see all my purchases in one spot. It’s the best way to start seeing how much you spend. Mary and I actually started spending LESS money once we used credit cards because we could see where it was all going. Build habits now!
Your first credit card is a big deal. You are starting your financial, adult future! It’s a big step for you to develop good habits (or fix bad ones), learn how to manage your money, track your spending, and build up a cache of points so that you can travel for free as well. Credit cards can be dangerous if you manage them poorly and don’t control yourself, or they can be a tool for SO much good if you learn how to use them effectively. Please let us know via commenting below or emailing us if you have any more questions!