A good first-time credit card for young adults is the Petal® 2 Visa® Credit Card because it rewards cardholders with 1 - 1.5% cash back on eligible purchases, has a $0 annual fee, and is fairly easy for people with limited or no credit to get approved for. Using this card responsibly is a great way to earn rewards while building your credit.
Most of these cards are for people who just started their credit journey. If you have bad credit, though, it’s definitely worth checking out the best secured credit cards available right now.
On the other hand, those with good credit or better will have access to the best credit cards on the market. Students are a special category, as the best credit cards for students tend to offer better deals than credit cards aimed at other consumers with similar credit scores.
The best way to build credit at 18 is to get a credit card in your name and use it responsibly. All major credit cards report account information to the credit bureaus each month, allowing you to build credit history. As long as the information shows on-time payments and reasonable… read full answercredit utilization, that credit history will be positive and you’ll be on your way to building a good credit score.
There are two ways to get a credit card at 18: as an authorized user or by applying for your own account. If you have enough independent income to afford monthly bill payments, you can get your own credit card account when you turn 18. The best type of credit card to get at 18 is a student credit card, assuming you’re in college. Credit cards for students tend to have better rewards as well as lower rates and fees than other starter credit cards for people with no credit.
How to Build Credit at 18 Years Old
Become an authorized user on a family member’s credit card.
Apply for a starter credit card.
Set up automatic payments from a bank account for your starter card.
Make sure your card’s monthly statement balance is much lower than the credit limit.
Work toward a high-paying job.
Save as much as possible and minimize debt.
Monitor your credit and make adjustments when needed.
Other Ways to Build Credit at 18
Using a credit card isn’t the only way to build credit at 18. There are several alternatives worth at least considering.
A credit-builder loan is essentially a loan that holds the borrowed money in a bank account while you make payments. This allows you to build credit easily, and doesn’t require a good credit score. Once you’ve made all of the payments, the money is released to you. Credit builder loans are typically small (think around $1,000) and have short repayment times, usually just a year, so their sole intent is to help you build your credit.
Financing a car using an auto loan can also help you build credit. Just like with any other loan, payments you make are reported to the credit bureaus. Getting an auto loan can also help your credit because a portion of your score is determined by your “credit mix,” and having an installment loan adds variety once you have a credit card.
You can arrange to have apartment rental payments reported to the credit bureaus. Some landlords report monthly rental payments to the credit bureaus automatically, but not all do. If your landlord doesn’t, you can still have your rental payments reported through a third-party service. Some of the top ones are RentTrack and eRentPayment. Paying rent is something you’d have to do each month anyway, so you might as well use it to build your credit, too.
Getting a starter credit card and/or becoming an authorized user on a family member’s or friend’s account is the best approach to building credit at 18 years old. Just remember that having your own account requires more responsibility, as you’ll be the one who has to pay the bills. If you don’t, your credit score will suffer. When you’re an authorized user, bill payments are the primary accountholder’s responsibility. Because of that, authorized users can file a dispute with the credit bureaus to get negative information removed from their credit reports.
A young person can get a credit card by becoming an authorized user on someone else’s account, or by waiting until they turn 18 and applying for one on their own. There are some guidelines and requirements for both methods – such as having self-control with spending, or having enough income to qualify for your own credit card – but the positives are well worth the trouble for a young person just starting to build their credit.… read full answer
Becoming an authorized user is the easiest way to start building credit as a young person because there’s no credit check for authorized users, and it’s the only way to get a credit card before you turn 18. Authorized users aren’t legally responsible for paying the bill, so it’s good to lay down some spending rules with the primary cardholder before using the card. As long as the primary cardholder pays their bills on time and uses the card responsibly, the authorized user will get good information on their credit report, even if they never use their card.
Young people age 18 and older are legally allowed to apply for their own credit card. However, credit cards - even student credit cards - require applicants under 21 to have independent income to comply with federal law. That means an 18-year-old can’t list a parent’s or spouse’s income, for example, on their credit card application. The more income you’re able to show on an application, the higher your approval odds, and possibly your credit limit, will be. So it’s best to have a job with steady income before you apply.
If you’re not sure about your ability to handle an unsecured credit line, or if your credit report already has some blemishes, consider a secured credit card. Secured credit cards require a deposit up-front, which then becomes your credit line, so it’s harder to “go overboard” with these credit cards. But they report to credit bureaus, so having one will build your credit every month as long as you pay your bills on time. And they are easier to get than unsecured credit cards. Some don’t even check your credit.
Finally, if you’re looking for your first credit card, it’s good to keep a few things in mind. The best credit cards for young adults aren’t expensive - they won’t have monthly or annual fees. Some secured cards have annual fees, but there are fee-free options, too. Also, find a credit card that reports to all three major credit bureaus every month so you can build your credit history.
No matter which card you choose, make sure to pay your bill on time. This will keep your account in good standing and help you build credit. Paying your balance in full every month will also allow you to avoid paying unnecessary interest. In addition, make sure to keep your utilization low by not going over (or even getting close) to your credit limit. Do those things as a young adult, and you’re on the road to a great credit score.
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