Budgeting Credit

How Old Do You Have To Be To Get a Credit Card?

Are you a young adult thinking about getting a credit card? If so, you are probably wondering if there are minimum age requirements for credit cards or how old you must be to get a credit card. 

Here, you will learn about credit card age requirements, secured vs. unsecured credit cards, and how you can start building credit history even if you can’t get your own credit card yet! 

How Old Do You Have To Be To Have Your Own Credit Card? 

According to modern law, borrowers must be at least 18 years of age in order to get a credit card account. It is actually illegal for credit card companies and other lenders to approve loans or lines of credit for individuals who are under the age of 18. This is why lenders are so particular about confirming your age/date of birth on any kind of funding application.  

However, there are still some ways younger adults can start using lines of credit. 

How To Get a Credit Card if You Are Under 18

How can you use a credit card if you are under the age of 18? While you can’t have your own credit card if you are underage, you may be able to use one under the account of another established borrower. 

Become an Authorized User

One way to use a credit card when you are a minor is to be an authorized user. As an authorized user on a credit card, you would have access to a credit line linked to another primary cardholder’s account. Authorized users can make purchases on the credit line but are not solely responsible for paying them back. The primary account holder is ultimately responsible for paying the balance on the authorized user’s behalf. 

Get a Secured Credit Card

Some lenders allow minors to have secured credit cards. A secured card differs from an unsecured credit card in that the credit limit is prepaid. Since the credit limit for secured cards is paid upfront, there is very little risk of accumulating overwhelming credit card debt.

What Are the Requirements To Get a Credit Card?

The basic requirements for most credit card issuers are: 

  • Applicants must be 18 years of age or older. 
  • Applicants must have a steady form of income. 
  • Applicants must provide a Social Security Number or Individual Taxpayer’s Identification Number. 

If an applicant meets those basic requirements, chances are they will be able to find approval from some sort of credit card. Lenders will also do a hard credit check to determine approval, interest rates, and other funding details. If you are currently going through the bankruptcy or pre-bankruptcy process, you may want to consider applying for a credit card at another time.

When lenders approve a general application, they will then typically ask for a few documents to confirm the information given. To get your own credit card account, you will most likely need to provide: 

  • A government-issued form of photo ID – such as a driver’s license or passport. 
  • Proof of income – you can prove independent income with documents like a pay stub, tax documents, bank statements, etc. 
  • Proof of residency – you can prove residency with a utility bill or with almost any piece of mail with both your name and address on it. 
  • Bank account information (optional) – a credit card issuer may request your bank account and routing numbers; however, not all issuers do this. 

How Do Credit Card Issuers Know if You Are Underage?

When you fill out a credit card application, you give the issuer permission to look at your credit profile and credit reports. Your credit report contains essential financial information lenders need to make an informed approval decision, which involves knowing how old you are and how long you’ve had an established credit history. Some warning signs that an application may be from a minor are: 

  • Little to no history of credit. 
  • History showing the applicant is still in high school/early college.
  • Little to no history of financial accounts, like other credit cards, loans, savings accounts, etc. 

If a lender sees that you are underage, they will immediately reject your application. 

How Are Minors Protected From Getting Their Own Credit Card Too Early?

According to the Credit Card Accountability Responsibility and Disclosure Act of 2009 (commonly referred to as the Credit CARD Act), a credit card company may only accept applications from borrowers who are 18 or older. 

Before this law, credit card companies often took advantage of young adults with gimmicks like a student credit card. With these kinds of scams, underage students could sign up for a credit card account. But, since many students don’t have the financial knowledge it takes to manage a credit card wisely, it was common for them to rack up substantial credit card debt. The Credit CARD Act helps protects minors from predatory credit card lenders and potentially damaging their young and vulnerable credit history. 

How Does Your Credit Score Affect Credit Cards / Approval From a Credit Card Issuer?

There are five main categories credit bureaus collect data on to compile your credit score and determine your credit score. And, having a credit card has the potential to affect them all. 

Payment History

Payment history includes paying bills and other financial obligations on time, like credit card balances. How on time you are with making payments is the most influential factor that goes into your credit report. Missing just one monthly payment on your credit card can negatively affect your credit score for up to seven years! 

Credit Mix

Credit bureaus also look at what kind of financial accounts you have. Generally, it’s best to have what is referred to as “good debt.” What’s the difference between good debt vs. bad debt? Well, good debt is loans that give the borrower more than just money. For example, student loans are often considered good debt because the funding is used to give the borrower a quality education. A mortgage loan is also usually considered good debt because the funding essentially puts a roof over the borrower’s head. 

Alternatively, bad debt is any type of loan that doesn’t add to the borrower’s overall quality of life. For example, easy payday loans online are one of the most common types of bad debt. Payday loans are high-interest, short-term loans that often leave the borrower in a cycle of debt. 

Length of Credit History

One of the financial factors that contribute to credit scores is the length of financial history. The longer you’ve had an open financial account in your name; the more your credit score will benefit. 

Debts Owed

How much debt you owe also contributes to your credit score. This means if you have a large outstanding balance on your credit card, you may see your credit score suffer because of it. 

Hard Credit Checks 

Every time you apply for loans or credit cards, lenders perform a hard credit check. Hard credit checks are a formal inquiry into your credit profile and are kept track of by credit bureaus. So, if you apply for too many lines of credit you aren’t qualified for, you may find that applying for credit cards hurts your credit

How To Establish Credit History if You Are Under 18 

The sooner you can start establishing a credit history, the better. Below are a few tips on how minors can start generating their credit history as quickly as possible. 

Secured Cards / Authorized Users 

As discussed, having a secured card or being an authorized user allows young adults access to credit cards. Additionally, when used responsibly, these financial products can help young adults build credit and start establishing a healthy financial history.

Get a Checking Account & Savings Account 

It is also a good idea to open a bank account for a young adult as soon as possible. While a minor may not have their own bank account, they may have what is called a custodial account. A custodial account essentially functions exactly like a regular bank account, except a custodial account is under the control of someone over the age of 18 on the behalf of a minor. 

Other Ways To Get Money if You Are Under 18

There are also other ways individuals under the age of 18 can get money besides through credit cards. Below are just a few of the ways young adults can get some extra cash! 

Get a Part-time Job

In most states, you must be at least 16 years of age in order to get a traditional job. It’s common for young adults to have a part-time job in food services or retail while they are in high school or early college. When a minor has a job, they don’t necessarily need a credit card since they have access to their own earnings.  

For those under the age of 16, there are also other job opportunities like: 

  • Earning an allowance through a parent or guardian. 
  • Babysitting or pet sitting for friends, family, or neighbors. 
  • Doing acts of service like raking leaves or shoveling snow for friends, family, neighbors, etc.  

Have a Garage Sale

Families can also have garage sales and give earnings to previous owners. For example, parents may consider encouraging children to let go of childhood toys or clothes by offering them earnings from the sale of those items at a garage sale. If you don’t live in an area where a garage sale is possible, you can also sell gently used items with online retailers like Amazon, Facebook Marketplace, or eBay. 

The Bottom Line: Age Requirements and Credit Cards

While you must be at least 18 years old to have your own credit card, there are still ways for minors to gain access to funding. In the meantime, young adults may start establishing strong credit health to hopefully gain access to special perks and rewards when their time to apply for credit comes! 

References:
Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act) | Federal Trade Commission