To start, I’d like to stress how important this mindset is. I am far from a pro, but having a good credit score is the key to basically everything after 25. You want to buy your own car, need credit. Want to buy a house, DEFINITELY need good credit. From a very rudimentary level, having good credit shows banking institutions that you will pay off any money you owe. Because of this, they will feel comfortable loaning you money, or extending a line of credit.
So now you say, “I have absolutely no credit, how will any bank extend me a line of credit on a credit card?” This is the problem that I found myself in not too long ago. I graduated from college debt free (very gratefully) and opened a college credit card only a few months before graduation. One of the biggest mistakes of my short credit card career was opening that card and not fully informing myself about credit and spending on cards. Long story short, I missed a payment (which didn’t affect my score because of the leniency of the card) and decided I would just wait the few months until I started earning money to spend on a rewards earning card.
From someone who wants to get heavily involved in the world of points and miles, this was probably the worst start. Nevertheless….
This lack of spending did not affect my high score, but it showed any bank that I applied to that I would open a card and not spend on it. Even though I now had a secure income, the credit issuers flagged this right away and I couldn’t get approved for any card. But what should you do…
A lot of companies expect this situation. Before anything else, I’d like to mention that student loans are a form of credit, so having student loans should secure you at least some cash back cards. So if you have absolutely no credit, where do you go…
- Cash Back
If you can get approved for a cash back card this is a great place to start. I will talk about the Chase Sapphire Reserve later, but if you can get approved for the Chase Freedom Unlimited this will get you jump-started to the wide world of Chase Ultimate Rewards. The Discover It card, and Capital One Quicksilver are also very good options.
- Secured cards
Any of the major AMEX or Chase cards are non-secured cards, in that the companies are extending you credit (or money) with the possibility that money doesn’t come back to them. A secured card requires you to make an upfront deposit, then as you make purchases it will take from that deposit. It is essentially a debit card but you are building credit. This is not the best option, but this can help propel you to those premiere credit cards.
- All else fails
This is the route I took. I couldn’t get approved for any cards, so I brought my dad in. I had him co-sign a card with me and could get the lowest level Wells Fargo rewards card. Not my first choice, but I knew I would be building credit and earning a little bit of rewards, so it beat any alternative.
The final leg..
I wanted to begin my blog with this because I wanted anyone that came to this website to know they could too be earning and traveling just like I [hopefully] will. There is not some crazy science to it, but there are endless possibilities. Never feel ashamed, and if you haven’t yet, sign for a card!