Your first credit card

What you're actually building

A credit score is a summary of how you've handled borrowed money. With no history there's nothing to score yet, so the first goal isn't points or perks. It's one account, used a little, paid on time, every month, for a long time.

Your first card should cost nothing to keep and be easy to get. Rewards can wait. A free starter card you keep for ten years does more for your score than any fancy card you apply for too early.

Options, from easiest to hardest to mess up

1. 1

   Ask your own bank or credit union first

   If you already have a checking account, they know you. Many have a starter or student card with no annual fee.

2. 2

   A secured card with no annual fee

   You put down a refundable deposit (often $49 to $200) and that becomes your limit. You use it like a normal card. After months of on time payments, many issuers move you to a regular card and give the deposit back. Make sure it reports to all three credit bureaus: Equifax, Experian and TransUnion.

3. 3

   A starter card made for no credit history

   Some issuers have no annual fee cards for people new to credit. Approval isn't guaranteed, but they don't require an existing score.

4. 4

   Become an authorized user

   A parent or partner with a long, clean history adds you to their card. Their good habits can show up on your report. Only do this with someone who always pays on time, and check that the issuer reports authorized users.

5. 5

   A credit builder loan

   Often from credit unions. You make small monthly payments into a locked savings account and get the money at the end. It adds an installment loan with on time payments to your history.

What to skip for now

• Cards with an annual fee, monthly fee, or setup fee as a first card.
• Premium travel cards. They're hard to get without history and the fees only pay off if you'd use the perks.
• Applying for several cards at once. Each application can add a hard inquiry.
• Prepaid debit cards sold as credit builders. Most don't report to the credit bureaus.
• Store cards with very high interest rates, unless you shop there constantly and always pay in full.

If you're under 21

Federal rules say an issuer can't open a card for someone under 21 unless they show their own income or assets to make the minimum payments, or have a cosigner who is 21 or older. Being an authorized user on a family member's card doesn't need either.

Your first 90 days

1. 1

   Put one small, regular bill on it

   A phone bill or a streaming subscription works. Don't use it for things you couldn't pay for with cash today.

2. 2

   Turn on autopay for the full statement balance

   Not the minimum. This one setting avoids interest and late payments.

3. 3

   Keep the balance small when the statement closes

   The balance on your statement is what gets reported. Using a small part of your limit looks better than maxing it out, even if you pay it off.

4. 4

   Check your report

   After a couple of months, see that the account shows up correctly (free, see Protect your credit).

Not financial advice. This is how credit works in the US, written plainly. Check any card's terms on the issuer's own site before you apply.