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Few things in your adult life are more important than a healthy credit profile. It can open doors to favorable mortgage and auto loan rates, housing application approvals, and even free travel through rewards credit cards.
That’s why you should begin building credit as soon as you possibly can. One of the best ways to do this is by opening a credit card and using it responsibly. But at what age can you get a credit card?
What is the minimum age for getting a credit card?
You must be at least 18 years old to apply for your own credit card. Anyone under 21 may need to include their independent income (or list a co-signer), as the Credit Card Accountability Responsibility and Disclosures Act of 2009 demands that credit card issuers assess whether young people have reasonable means to pay their credit card bill.
Become an authorized user to build your credit score (even if you’re under 18)
One of the biggest coups in the world of credit is the ability to establish a stellar credit report before you’re 18 by becoming an authorized user.
An authorized user is an additional card member on someone else’s account. It’s not a separate credit card account. For example, when you spend money with an authorized user card, the bill appears on the primary cardholder’s statement. A parent may request an authorized user card as a way to share funds with their child when they’re too young to have their own line of credit.
Now, here’s the best part: Authorized users (almost always) benefit from the account information of the primary cardholder. A card issuer reports user activity, such as on-time payments and credit utilization, to the secondary cardholder’s credit report. Even better, you don’t even need to use the authorized user card to build credit. You can simply request the card and then tuck it away. As long as the primary account holder exhibits healthy credit habits, your credit profile will shine.
Each bank enforces unique age restrictions for authorized users. Some banks (like Citi) have no minimum age requirement — theoretically, a child could qualify for top-tier rewards credit cards as soon as they turn 18 thanks to the forethought of a financially savvy parent with a good credit score.
That said, you should ensure that your bank will actually report information to the credit bureaus for an authorized user. For example, Chase states that it doesn’t report the authorized user credit history of minors to credit reporting agencies.
Building credit with no credit history
If you’re of age to have your own credit card, you won’t have your pick of the litter. You need to establish a good credit history before banks will trust you enough to extend credit your way. If you’re unable to ride the coattails of someone with established credit as an authorized user, there are other options available.
Secured credit card
A secured card is one that doesn’t require the bank to stick its neck out for someone who has no track record of using credit responsibly.
Here’s how it works: When you open a secured credit card, you’ll have to submit a refundable security deposit to the bank (often between $200 and $5,000). The amount you choose to deposit will determine the size of your credit limit. The reason is simple — if you default on your credit card bill, the credit card company can use your security deposit to pay it. This minimizes the bank’s risk.
If you decide to cancel a secured credit card, or if the bank upgrades you to a regular credit card, you’ll get that security deposit back.
Student credit cards
In many cases, student credit cards require zero credit history. They’re tailored for those just beginning their credit journey. On that note, don’t expect an impressive credit line out of the gate.
You may need to submit proof that you’re a student — or that you will be in the near future. As an example, Capital One student credit cards stipulate that you must be currently enrolled at a “higher education institution,” like an accredited university or a community college (or admitted with the intent to enroll in the next three months).
Use a co-signer
Possessing no credit history will relegate you to the type of beginner credit cards mentioned above — many of which offer little in terms of rewards or ongoing benefits. This can change, however, if you’ve got a cosigner with established credit.
When you apply for a loan with a co-signer, the lender will examine their credit and approve you based on your co-signer’s creditworthiness. That’s because it’s ultimately the co-signer’s responsibility to pay the bill if you cannot. If the loan defaults, the co-signer’s credit will suffer.
What is the best first credit card?
For young adults who are searching for the best credit card to begin their pilgrimage into credit, there are a few rewarding options to consider.
For students, the Capital One SavorOne Student Cash Rewards Credit Card is a solid option. Its high returns make it one of the best student credit cards on the market — and one of the overall best cash-back credit cards, for that matter. You’ll earn:
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8% cash back through Capital One Entertainment
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5% cash back for hotels and rental cars reserved through Capital One Travel
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3% cash back on dining, entertainment, popular streaming services, and at grocery stores (not including Target or Walmart)
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1% cash back on all other purchases
If you’re not a college student, the Discover it® Secured Credit Card with no annual fee is a strong contender. It offers:
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2% cash back on $1,000 in combined purchases at gas stations and restaurants each quarter (then 1% after that)
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1% cash back for all other eligible purchases
Discover will also match the cash back you earn during your first year as a card member. In other words, you’ll effectively earn between 2% and 4% cash back for all purchases in the first year. That’s a great deal — especially among starter credit cards.
Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. All opinions belong solely to Yahoo Finance and are not those of any other entity. The details on financial products, including card rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the bank’s website for the most current information. This site doesn’t include all currently available offers. Credit score alone does not guarantee or imply approval for any financial product.