Financial Adulting: How to get a credit card

Are you interested in buying a home, a car, going to college, or opening up a business, but don’t have any money to pay for it? You can consider applying for a loan at the bank that will pay for you, and you will slowly pay the lender back in interest over time. Yet, to get a loan in the first place, you need to have a good credit history. 

 

A credit history is a record of how good you are at paying your bills on time, and demonstrates your responsibility with money. One way to build your credit history is to open a credit card. Here are the steps to doing that: 

1) As soon as you’re 18 and have an income, or feel responsible enough to handle money, go to the bank and open up a checking/savings account.

·     If you are younger than 18, you can consider opening a joint account with an adult. 

2) Request to talk to a Personal Banker, and let them know you want to see the available credit card options, and fill out a credit card application. 

·     Choose a card with good perks like: having a high cash back rewards rate with each purchase, no annual fee, or the ability to earn points/miles with each purchase. 

·     When getting approved for a credit card, lenders want to see you have a steady income and can make payments. They will ask you for your employment information, and driver’s license. 

3) If accepted, you will receive the credit card in the mail. You will just need to activate it, and start building your credit. 

·     Build your credit by making small purchases and paying in full, on time, every month. Set up automatic payments, or put a reminder on your phone/calendar to ensure you pay by the payment due date. 

·     Find out what your available line of creditis, and keep your balance low relative to that number. Do not use more than 40% of your available line of credit. 

·     Only buy what you can afford. 

·     Know your Annual Percentage Rate (APR).This number divided by 12 months gives you how much interest will be applied to your outstanding balance on your credit card. The APR can change year to year based on the Federal Reserves lending rate, so keep an eye on it.

4) Check your credit score annually.   

·     Every year, you can check your credit report for free from all three credit collecting and reporting agencies: Equifax, TransUnion, and Experian at annualcreditreport.com. 

·     Your credit score is best when 720 or greater. 

·     You are now well on your way to building credit! Well done. 

How are you helping build your credit score?

Photo source: cafecredit.com

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