When should you get your first credit card? Plus tips to follow for building good credit

Young Woman Builds Good Credit with Her First Credit Card at College Bookstore
December 02, 2022 | Lois Sullivan

Getting your first credit card can be exciting. Using it correctly can help you establish and build your credit. But for some, the temptation to overspend is significant, making a credit card challenging to manage. If you're wondering when you should get your first credit card, this guide can help you make an intelligent decision. We've also compiled some helpful tips to follow when you decide to apply for and obtain a card.

When you should get your first credit card

First, the decision to get your first credit card is a big one. Each individual will have a timeline based on specific financial goals and situations. But for most people, the best time to get their first credit card is when they're 18 years old. You must be 18 to qualify for a credit card, as only adults can build credit.

Since you'll need credit to qualify to lease an apartment, purchase a vehicle, and get a cell phone plan, it's helpful to start the process as soon as possible after you turn 18. But this doesn't mean you should go out and start using it for all your purchases, especially things you can't afford. 

Getting a credit card is one of the first steps in financial independence, so it’s tempting to use it to buy a bunch of things. Doing so, however, can harm your credit score, which essentially voids the reasons for getting a credit card as soon as possible. Understanding your finances can be overwhelming when you're on your own for the first time, but one of the most important things to remember is you should try to purchase things you can afford to pay for when the bill comes due. 

Why you need to start building credit

One of the three key factors determining your credit score is the length of your credit history. Credit history refers to the time you've had credit accounts open in your name. If you wait too long to apply for a credit card, you'll miss out on time you could be building your credit history. The other factors impacting your score are your debt-to-income ratio and your record of making on-time payments.

Your credit score is a three-digit number reflecting your willingness to repay money borrowed from a lender. In other words, it represents a lender's risk by choosing to lend to you. A lower credit score indicates a higher level of risk. The lowest possible credit score is 300, while the highest is 850. 

Every credit-related action you take throughout your adult life can affect your score. Starting early habits helps to establish a foundation for your credit history. You'll need a good credit score to qualify for an auto loan, a mortgage and any other loans you might seek in the future. By making wise financial decisions when you get your first credit card, you can protect your future and make it easier when you need to apply for loans. 

When applying for loans, your credit history also factors into the interest rate for which you can qualify. With a lower score, you'll end up paying more in interest. It's well worth making an effort to maintain your credit score when you get a credit card for the first time.

First-time credit cards available

Many credit card companies offer secured credit cards to first-time applicants, which differ from traditional or unsecured cards. A credit card works like a line of credit, which the holder can use to make purchases. At the end of each billing cycle, the cardholder must pay the entire balance, avoiding interest payments. But as an added security measure, credit card companies require the payment of a security deposit on secured cards. This deposit is usually equal to the credit limit on the card.

A secured credit card is a great option to help you establish credit while building good habits of spending money and paying it back each month. Using this type of card helps raise your credit score, and options are available from most of the major credit card issuers.

Students may qualify for unsecured cards geared toward those attending college. A college-focused credit card often has a lower credit limit than a traditional card, which makes it easier to establish credit without overspending.

Tips to follow when you get your first credit card

As you prepare to get your first credit card, use these tips to make an intelligent, informed decision.

Shop around

Before applying for the first credit card you find, take some time to compare options and consider what card is best for your lifestyle and needs. You can typically find the information you need to decide online, as credit card companies usually post interest rates, applicable fees and other details of their offerings. Since most young credit card applicants don't have much extra money, it's worth looking for a card without an annual fee.

You can also look at the reward offerings on different credit cards. Most offer at least some type of rewards, such as cash back or points you can use to redeem for rewards. Getting access to rewards is one advantage of using a credit card.

Keep your balance low

The limit on your credit card reflects the maximum amount you can spend during a billing cycle. But it's best to avoid maxing out your card, as spending below your limit helps to improve your credit score. Try to keep your balance between 10% and 30% of the credit limit to improve your credit utilization rate. At first, you may have a limit of only a few hundred dollars, but as your limit increases, keep an eye on your credit card charges to avoid hurting your credit score.

Review the charges regularly 

Fraud happens, and you'll want to review your charges regularly to look for anything concerning. If you spot charges you didn't make, contact the card company's fraud department as soon as possible to report the fraudulent charges and close the card. The company will issue a new card to ensure the compromised number doesn't remain in use. You're not liable for charges on your card you didn't make.

Use the card

Although keeping your balance low is essential, you don't want to keep it at zero. You won't build or improve your credit if you never use your card. Credit card companies and lenders review how you use credit and repay debts. Failing to use the card at all may also lead to the account being closed. 

Now that you know when you should get your first credit card and how to use it effectively, you can start comparing options and applying for the card you want. At Alliant, we offer two credit card options to applicants, both of which come with impressive rewards and no annual fee.

Explore additional articles on credit cards and loans:


You might like

Sign up for our newsletter

Get even more personal finance info, tips and tricks delivered right to your inbox each month.