Should you apply for a credit card with no credit? - The University of Tulsa

Should you apply for a credit card with no credit?

CCB finance professor, Meagan McCollum.

Collins College of Business Assistant Professor of Finance Meagan McCollum was featured in a recent WalletHub article that discusses the benefits of having a credit card. McCollum, who launched a real estate minor and advisory board in TU’s Collins College of Business in fall 2022, explains how a credit card can help a person establish their credit.

Here are key excerpts from the article.

Q: Is it important for people with no credit to get a credit card?

A: It is important to establish a credit history. For most people, the easiest entry point to developing a credit history is to open a credit card.

Q: Why are some people with no credit hesitant to apply for a credit card?

A: Some people are hesitant because of past experience with spending or debt personally or in their families or social circles. Individuals may also worry about the cost of credit cards and be concerned about their ability to manage credit responsibly.

Q: If you have no credit, is it better to be an authorized user before getting your own credit card?

A: Not necessarily, although it does not hurt, if someone is willing to add you in such a capacity. This is a common strategy for parents to add their teenage or young adult children to a credit card account to help them establish a credit history. However, establishing credit in your own name is an important step that individuals should take sooner than later.

Q: What tips do you have for someone filling out a credit card application for the first time?

A: Read all of the terms and conditions carefully. Understanding how the billing cycle works, how interest is calculated, what minimum payments are required, if an annual fee is charged and under what conditions the terms of the card could be changed are all important things to know.

Q: Is it better to work with a bank or a credit union when you have no credit?

A: It is possible that if you have an existing relationship with a bank or credit union, for example through a checking or savings account, these institutions may be more willing to offer you a credit card for the first time. Even without a credit history, if a bank or credit union sees that you responsibly manage a non-credit account with them, they may be more inclined to offer you your first credit card.