Part 5: Meeting the Spending Requirements
Part 6: Taking Care of Credit Reports
Part 7: Conclusion
The one biggest disadvantage when it comes to credit for young adults is the lack of credit history, which is the most common reason your applications are declined. However, my strategy is to use this as our advantage rather than giving up: If you have nothing to lose, you can only win. The idea is to apply for as many credit cards as you could because you have nothing to lose if you get declined. Based on my experience, here are some recommendations:
1. Capital One Journey
This card is a great card for building credit. It has no annual fee, 1% cash back on all purchases and 25% extra on top of the 1% if you pay your bill on time. It is extremely easy to get approved as long as there's nothing bad on your credit report. However, Capital One pulls from all 3 credit reports, no sign up bonus and they also give very little credit. Therefore, it is good to use for the first few months and put into the drawer.
2. Citi Forward
I highly recommend this card for beginner. No annual fees, 5 points/dollar for bookstore, restaurant and entertainment and no cosigner needed. Somehow Amazon.com is classified as bookstore so you are earning 5% off on Amazon purchases! You also earn 100 points/month for paying on time. 0% intro APR for 12 months on purchases and balance transfer. This card has the best offer I've ever seen for this market segment. There are 2 promotions going on: earn 10,000 points(~$100) after $650 in purchase and sign up for paperless statement in the first 3 months. The 30,000 points offer has a higher spending requirements and only earn 2 points/dollar in bonus categories. Therefore, I recommend the lower bonus. As always, YMMV. If the 30k works better for you, go for it. This is a great card for amazon and dining out. Citibank also does a decent job to increase your limit without an extra hard pull.
3. Credit card with your existing bank
If you have a checking account, it's worth getting a credit card from the same bank since you already establish a relationship with them. However, please make sure it is unsecured credit card, no annual fee and there is no requirements for a cosigner. If your bank doesn't offer student card or it has an annual fee, I recommend get the 2 cards I mention above.
The most important detail about your first credit cards is they need to have no annual fees so you can keep them as long as you can. It will help you to age your credit report without much effort. After a few months establishing your credit, we can start moving to mainstream credit cards where the game begins.
Notice: this post is entirely my own opinion. I am not an certified financial advisor. Do at your own risk. I am not affiliated with any credit card company nor do I earn any commission..
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