What are the Requirements to Sign Up for a Credit Card?
Let’s Learn About: The Requirements to Sign Up For a Credit Card
In order to approve you for a credit card, companies will have minimum requirements for your age, income, and credit score.
Student and secured credit cards have different requirements than standard credit cards.
It’s possible to sign up for some credit cards even if you have no credit history.
You can sign up for a credit card by filling out an application by phone or online. You can also see if you’re pre-approved before applying. That may sound easy, but getting approved for a credit card after you apply often represents years of responsible credit use. That’s because credit card issuers will review your credit history to determine whether you meet the necessary requirements for the card before accepting or denying your application. It’d be wise to get familiar with your credit score — and how you can try to improve it if you need to — before applying, but you do have options if you have little to no credit history.
Here’s what to do if you’re looking to sign up for a credit card:
1. Review the basic credit card requirements before signing up
Not everyone can sign up for a credit card and get approved for one. There are a number of requirements you’ll have to meet to be considered, depending on the credit card issuer. Here are four sample criteria:
Age: First, you need to be old enough to get a credit card. The Federal Credit CARD Act of 2009 mandates that if you’re under 21, you will need to have an independent income to get approved for your own credit card account. There are also student rewards cards, like the Discover it® Student Card, for young adults who qualify. In most cases, you must be at least 18 years old to open your own credit card account.
Income: Credit card issuers want to know that you have your own source of income to be able to pay your bills. If you are 21 years old or older, credit card issuers may consider your income and the income of another person that is available to you as part of the application process to determine whether to approve your application, and if so, the account’s credit limit.
Low Debt: Credit card issuers want to know how much debt you have so they can evaluate whether your debt is manageable at your income level. A good rule of thumb is to use only a small percentage of your available credit — which is measured by your credit utilization ratio. If you already have a credit card or line of credit or loans under your name, you may want to try paying down your existing debts before applying for new credit cards.
Credit Score: Credit card issuers evaluate your credit history and the likelihood you’ll be able to pay your bills by looking at your credit score. If you have never had a credit card or taken out a loan before, you might not have any credit history. If that’s you, you have options—read on.
2. Learn the age, income, and credit score requirements for first-time cardholders
If you’ve never had a credit card before, the first thing to realize is that, with each credit application, a credit card company assesses your complete financial picture — including your credit report, income, expenses, and other criteria — and decides whether to extend you an offer based on that full picture. So if you’ve responsibly managed other forms of credit in the past, you may qualify.
But if you’re starting out with no credit history at all, you may be a risk in the eyes of the credit card issuer because it can’t gauge your ability to make payments on time. The good news is that you have options to build your credit history, and you might be surprised at how fast you can do so.
3. Explore how to sign up for a credit card with no credit history
Your first option is applying for a student credit card to help build your credit history.
A second option is to apply for a secured credit card. If you’re approved, a secured credit card requires a security deposit equal to your line of credit.
You can also become an authorized user on someone’s account, such as a parent or spouse. Authorized users have the ability to make purchases and pay down a balance on the account, while building a credit history with responsible use in the process.1
4. Considerations in choosing the card to sign up for
If you’ve decided to sign up for a credit card, here’s what you need to consider to find the right fit.
Why you want the credit card
First things first: you need to figure out what your goal is for getting a new credit card. Are you hoping to use it to build your credit history? Do you want to take advantage of a promotional APR offer? Are you hoping to transfer a balance to your new card at a lower interest rate? Understanding what purpose the card will serve can help you target your search.
Your credit score
Some credit cards are geared toward people with excellent credit, while others may be more appropriate for someone with good or fair credit. Familiarizing yourself with what’s in your credit report can help you know where you stand and search accordingly. Everyone in the U.S. can access their credit report for free once every twelve months from each of the three main credit bureaus.
A rewards credit card can be a valuable tool for earning points, miles or cash back on purchases. Note that some rewards cards come with an annual fee.
Type of rewards
Someone who does a lot of flying, for example, may want a travel rewards card. If you make most of your credit card purchases at the grocery store, on the other hand, a cash back credit card might make more sense.
Fees and APR
Check whether the card has an annual fee, foreign transaction fees, or a high APR. Signing up for a card with these fees can increase the cost of using a credit card significantly, especially if you are unaware of how these fees apply to your credit card’s usage.
Many rewards cards offer an introductory rewards bonus for new members. For example, with Discover Cashback Match, all the Cashback Bonus you’ve earned by the end of your first year with Discover is matched, dollar-for-dollar.2 If you’re interested in a particular card because of the bonus offer, you need to be clear on whether you can meet any requirements to get the bonus offer (if there are any).
Sign up for a credit card the smart way
Signing up and applying for a credit card can be an exciting way to gain access to credit and start building your financial future. Smart moves like researching for the best card and, once you’re approved, automating payments so that funds are automatically debited from your checking account each month can set you up for success. Make sure you monitor your statements, as well as your credit report periodically, to ensure that there are no errors or surprises.
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