How To Get Your First Credit Card: A Beginner’s Guide

When you open your first credit card, you also open the door to more financial opportunities. A credit card lets you make large purchases and pay them back over time. Responsible credit card use can also help you build good credit, which is essential for life milestones like buying a house or car.

If you’re ready to join the over 175 million cardholders in America, you have many options to explore. Some credit card companies offer cards designed for first-time cardholders. Ultimately, the best first credit card for you depends on your financial situation.

1. Check Your Credit Report And Score

A good place to start when opening your first credit card is checking your credit report and credit score. This gives you an idea of your financial standing, which impacts your ability to be approved for a credit card. Checking your credit report can help you identify focus areas for improving your credit. Factors that affect your credit score include:

• Payment history
• Amounts owed
• Length of credit history
• Mix of credit accounts
• New credit inquiries

No matter how extensive (or brief) your credit history, you should make sure the information in your credit file is correct. Be sure to dispute errors on your credit report before applying for a credit card, as inaccuracies can negatively affect your credit and hurt your chances of approval.

Credit card issuers often perform credit checks when reviewing your credit card application. Lenders use this information to determine your creditworthiness. By checking your credit report before applying for a credit card, you’ll gain insight into the information lenders will see.

You can obtain a free credit report from each of the three major credit bureaus weekly through the end of 2023 at AnnualCreditReport.com.  

2. Learn How Credit Cards Work

After reviewing your credit report, spend time researching how credit cards work. Understanding the responsibilities of being a credit card holder is important as you begin using your new card. You may be unfamiliar with some of the terms you’ll encounter as you apply for and make purchases with your card. Some terms you should know include:

• Annual fee: This is a service fee some lenders charge yearly if you have a credit card with them. Not all cards will have an annual fee.
• Interest rate: An interest rate is the amount you’re charged for borrowing funds, in proportion to the amount you borrow. For credit cards, you incur interest charges on any unpaid balance you carry at the end of a billing cycle.
• Annual percentage rate: An annual percentage rate (APR) is the cost of borrowing funds. For credit cards, the APR is the same as the interest rate.
• Credit limit: Your credit limit is the total amount of credit available for you to borrow.
• Balance transfer: A balance transfer is when you pay your credit card’s balance off with a different card.
• Balance transfer fee: This is a fee lenders may charge if you transfer your credit card balance to another card.
• Foreign transaction fee: This is an additional fee some lenders charge on international purchases you make with your card.

Secured Vs. Unsecured Credit Cards

Knowing the differences in how secured and unsecured credit cards work will help you choose the kind of card to apply for.

With a secured credit card, you’ll have to pay a refundable security deposit. The amount of your deposit will serve as at least part of your credit line, which can be higher. As you demonstrate good credit use, your lender may allow you to switch your card to an unsecured card. They may also return your deposit to you.

An unsecured credit card doesn’t require a security deposit. Since this can be riskier for the lender, they may be more selective when approving applications. For this reason, a secured credit card may be easier to obtain if you’re just starting your credit-building journey.

3. Know What To Look For In A First Credit Card

While the right credit card for you depends on your personal circumstances, most first-time cardholders should look for certain features in their card or credit card company. These features include:

• Lenders that report to credit bureaus: If your focus is building credit with your new card, make sure the company you apply for a card with reports your activity to credit bureaus.
• Rewards programs: You can earn rewards, such as cash back or points on purchases, for using some credit cards. Some cards let you convert points into travel miles. Others may offer an exclusive cash-back rewards rate for purchases with certain businesses or products.
• The absence of annual fees: While some card issuers charge an annual fee for certain cards, you’ll find a number of credit cards without an annual fee.
• Introductory 0% APRs: Some cards have an introductory APR of 0%, meaning you won’t pay interest on purchases you make over a certain period of time after opening your card.

Along with the features to seek out in a new card, you should know what to avoid. Be leery of cards that charge additional fees. For example, some card companies charge for foreign transactions and balance transfers, so it’s important to keep these add-ons in mind.

4. Complete And Submit A Credit Card Application

Once you choose a credit card that makes sense for you, you’re likely ready to start the credit card application process. If you’re applying for multiple cards, each lender may request different information with your application. Generally, you need to verify your identity and financial information. You may be asked to provide:

• Your Social Security number (SSN)
• Bank account information
• Proof of income (for example, pay stubs and tax forms)

Before submitting your application, take time to thoroughly review the information you plan to provide. Inaccuracies can delay the process, so taking extra time to carefully look over your application can end up saving you time in the long run.

5. Receive The Credit Card Company’s Decision

Upon submitting your completed application, the next step is to wait for the credit card company’s decision. How long it takes to hear back will vary from lender to lender. Some companies offer instant approval, while others may take a few business days, a week or longer. If problems arise on your application, the card issuer will let you know what action you must take to move forward.

If the lender denies your application, you can still take steps in an effort to get approved in the future. Review your credit report for flaws that might have led to your application’s rejection. If you identify the problem, you may be able to fix it before applying again. If you haven’t already, you might consider applying for a secured credit card or other cards geared for those with a lower credit score.

If your application is approved, all that’s left for you to do is to wait to receive your card. Once you have it, you may have to activate it. Then, you can start making purchases and building credit.

Tips For First-Time Credit Card Users

If you want to use your new credit card as a means to build credit, responsible card use is vital. Many card issuers report your activity to credit bureaus, so good habits will help you build a healthy credit file.

Avoid late payments. Paying your credit card bill on time is crucial to building healthy credit. Credit card billing cycles tend to be month to month, so try at all costs not to let due dates pass you by.

Pay off your balance in full. When you make your monthly payment, attempt to pay off your entire balance before the end of the billing cycle. Your leftover balance will typically incur interest charges, so try not to carry debt into your next billing cycle.

Keep a credit utilization ratio under 30%. According to FICO^®, using less than 10% of your total credit limit should be a cardholder’s goal. However, most financial experts recommend just keeping your credit utilization ratio below 30%, which typically shows lenders you’re able to manage your finances. So, if your credit limit is $5,000, you should try to use less than $1,500.

Space out new credit applications. Lenders typically perform a hard inquiry on your credit as a part of their application review process. Hard inquiries cause your credit score to drop a few points. While a mix of credit accounts contributes to a good credit score, you should give your credit score time to recover between submitting applications.

Keep your credit card account open. A longer credit history can boost your credit score. If you close the first credit card you opened, the average age of your accounts will be lower. Any credit-building you’ve done on this account will also stop showing up on your credit report.

First Credit Card FAQs

Check out our answers to some common questions people ask as they prepare to open their first credit card account.

What is the best credit card for beginners?

The best first credit card for you largely depends on your personal preferences and financial standing. Some credit card issuers offer starter credit cards, specifically for first-time card holders. These cards can be easier to get for borrowers with poor credit and those with little to no credit history. Many starter credit cards are secured.

If you’re a college student, you could consider a student credit card. You must be enrolled in college and at least 18 years old to be eligible for a student card. This type of credit card offers students the opportunity to build their credit while they’re in school since lenders will report activity to credit bureaus.

What credit score do I need to get a credit card?

The credit score you need to get a credit card will differ by lender and card type. A good credit score can help you qualify for ideal card terms. Many lenders use the FICO^® scoring model in which a score of 670 puts you in the “good” range.

Luckily, some lenders offer cards for borrowers with fair credit and even bad credit. These cards may come with a lower credit limit.

Can I get a credit card with no credit?

You may still be able to get a credit card with no credit. The type of cards you qualify for with no credit history may be more limited since creditors have less information about your dependability for paying back debts. To boost your chances of getting approved for a credit card with no credit history, consider using a co-signer.

How do I use credit cards to build credit?

If you want to use a credit card to build credit, responsible card use is essential. You can build a strong credit profile through good habits like making on-time payments and keeping your credit utilization low.

What is the minimum age for a credit card?

Most credit card companies require you to be at least 18 years old to have a credit card account. However, some companies allow people under 18 to be an authorized user on an adult’s credit card. Check with different lenders for their specific age requirement for an authorized user.

The Bottom Line: Find The Best First Credit Card For Your Needs

Before applying for your first credit card, explore the different types of cards available to someone in your financial position. Seek out cards designed specifically for new cardholders.

Once you secure your first card, your next step is to use your card wisely. Luckily, the Rocket Money^SM app can help you manage your new credit card. For help keeping track of your spending and the due dates of your bills, sign up for the Rocket Money app today.