For young adults, obtaining a credit card and building credit can be a tricky task. Credit cards are a useful tool for building credit, but many creditors aren't willing to extend cards to individuals with a limited credit history. To make matters worse, the 2009 Credit Card Act imposes extra credit card restrictions for young adults. However, with some planning and foresight, a 19-year-old can still get a credit card and build a score.
Find credit cards geared to individuals in your age range and credit history. If you know your credit score, search consumer finance websites for credit cards recommended for your credit score range. Students should look for student credit cards specifically designed for university students without credit experience. If you aren't a student, look for bank credit cards aimed at individuals with limited credit history or retail store credit cards.
Review the credit terms of each card you've picked out and rank them from best to worst. Look at the annual percentage rate for each card, which is the interest amount you'll be paying to carry over a balance from month to month on the card. The higher the rate, the more you'll pay. Don't be fooled by low introductory rates -- they're a helpful temporary benefit, but they generally expire after six months or a year and usually shoot up. If you can, choose a card application that offers a cash bonus or earned points on transactions. Apply for the card with the best terms within the group.
Obtain all necessary documentation before submitting your credit card application. The Credit Card Act of 2009 requires individuals under 21 to provide proof of income or find a co-signer. If you have a job, make a copy of a pay stub to verify employment. If you don't have a job, talk to your parents and other relatives and friends, and ask if anyone is willing to co-sign on your credit account. Once you do get a job, you can choose to close any co-signed accounts.
Once you obtain a credit card, use it responsibly to build your credit. Late payments and a revolving balance can hurt your credit score, so only make purchases if you know you have enough cash in your bank account to cover the transaction. Jot down your credit transactions and compare them against your bank balance, just like you would for checks and debit card transactions. Make a commitment to pay your balance in full every month.
- Bankrate: Under 21? Credit Cards Hard to Get
- CreditCards.com: How the Credit Card Act Affects Young Adults Under 21
- FICO. "Credit Checks: What Are Credit Inquiries and How Do They Affect Your FICO® Score?" Accessed Sept. 17, 2020.
- Consumer Financial Protection Bureau. "§ 1026.51 Ability to Pay." Accessed Sept. 17, 2020.
Based in San Diego, Calif., Madison Garcia is a writer specializing in business topics. Garcia received her Master of Science in accountancy from San Diego State University.