Opening your first credit card is one of the rites of passage into genuine adulthood, but with so much conflicting information, it can all get confusing fast!
Let Horizon walk you through the process to help you build a strong credit score and credit history that will serve you well throughout your life.
Choosing a credit card
The way people typically build a credit history is by opening a credit card. But ironically, many credit cards won't accept your application because you don't yet have that credit history!
You'll need to build your credit history from the ground up, starting with cards that offer a very low limit but will accept almost any applicants, such as those offered by Capital One or Credit One. If you're rejected from even these cards, work on paying all your bills on time for a few months and then try again. You can also stop by Horizon to ask about the credit cards we offer our members.
Don't apply to just any card that'll have you. Look for these features when making your choice:
No annual fees. You shouldn't have to pay money to use your card. Sometime in the future, you may want to open up a high-perk card with an annual fee to match, but for now, just concentrate on building your credit score.
A low interest rate. For your first credit card, you likely won't be offered a really low interest rate, but that doesn't mean you should be taken for a ride. Shop around for a card offering a reasonable rate, maybe only slightly higher than the average rate.
Incentives for good behavior. Why not earn brownie points for playing by the rules? Look for a card that offers incentives, such as a bonus each month when the bill is paid on time, a waived first late-payment fee or no foreign-transaction fees.
Credit card dos and don'ts
Once you've opened your card, or cards, make sure you use them to build and maintain that excellent score. Follow these guidelines and you won't go wrong:
- Pay your bill on time each month.
- Check your credit score monthly.
- Review your statements for suspicious activity.
- Keep your cards in a safe place.
- Accept offers of a higher line of credit.
- Pay just the minimum balance due each billing cycle.
- Open new cards just before taking out a large loan, like a mortgage or auto loan.
- Use all of your available credit.
- Allow unsecured websites to save your card information.
- Share your card information with anyone.