How Students Can Get Credit Cards, Despite Tight Lender Standards

Today, many college students may feel that they are in a position to obtain their own credit cards, which can help them accomplish a number of financial things that may not currently be within their power. However, many will likely find significant hurdles to doing so, both from the federal government and lenders. Fortunately, there may be ways around both.

In the past few years, it has become more difficult for most potential borrowers to obtain credit cards for a number of reasons, but this is particularly true of those who may still be in college, or are around that age. As such, those under the age of 21 years old may want to look into the various ways in which they can increase their chances of obtaining this type of account as a means of getting over the higher qualification standards that may currently exist and also make sure they’re covering all their bases when it comes to staying within federal borrowing rules.

How to improve chances of approval

One major issue that most young adults will likely face when they’re trying to obtain a credit card for the first time is that, for the most part, they have limited or even non-existent borrowing histories. In general, lenders prefer credit card borrowers with long, successful borrowing histories because it shows they can manage an account, but young adults usually just haven’t had the chance to build up a rating because of their age.

Unfortunately for students, credit card lenders tend to see applicants simply as numbers, and specifically, the numbers of their credit score. Those with no borrowing histories usually don’t have credit scores, and those with limited ones might have ratings too low to qualify for the credit cards they may want to get. As such, both will likely have some work to do before they start looking for the most beneficial accounts available from lenders.

Both will likely benefit specifically from accounts designed for those with limited or no credit histories, such as accounts known as “secured” credit cards. These cards can be set up by making a one-time down payment that establishes the account, and they can be beneficial because they require no credit check to obtain. The size of the down payment also sets the credit limit on the card, and once it’s all set it can be used as any other card might be. However, borrowers should keep in mind that these accounts, because they’re designed as a way for those with bad or no credit to begin borrowing and building (or rebuilding) their standings, they also come with significant risk for lenders, and as such carry higher rates and fees than many other cards might.

However, with proper account management, several months or more of using such an account responsibly — keeping spending limited, making all payments on time and in full, maintaining low balances or paying them off completely every month, etc. — young borrowers will likely be in a position where their credit scores have improved significantly, and might therefore be able to obtain newer, more beneficial accounts.

Dealing with regulatory issues

Since the passage of the Credit Card Accountability, Responsibility and Disclosure Act several years ago, those under the age of 21 years old have faced significantly more hurdles to obtaining such an account, though these were put in place as a means of protecting younger consumers from taking on accounts they couldn’t afford.

This can pose significant problems to those attempting to obtain any sort of credit card, but there are ways around the restriction. For one thing, they may be able to do so if they have an adult co-signer, such as a parent, help them to open the account. This will allow them to build credit in their own name while also giving themselves (and lenders) the added protection of an adult with a lengthier borrowing history to help them navigate what can often be difficult financial decisions when first starting out with such an account.

Young borrowers with significant independent incomes may also be able to provide proof that they can afford such an account, though the ways for doing this are less defined by the federal law. Proof of income can come in a number of different ways, though individual lenders will generally be able to give borrowers a clearer idea of what they will require before signing off on a young person’s individual financial independence.

Consumers under the age of 21 years old might also want to take the time to check their credit reports when they want a new credit card, as there may be unfair markings on these documents that are dragging down their scores. Fortunately, working with a credit repair company may be able to help correct the issue with relative ease.

Posted in Credit Card
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