Question: I have been trying to apply for a credit card online, but everyone has turned me down. I am 18 years old and have just started working, so I don't have a credit history. What can I do to get a bank to accept my application?
Answer: Ironically, it can be tougher for a young adult who's working to get a bank credit card than for a student with no income.
That's because credit issuers figure that as a long as a child is a dependent, parents will bail him or her out of credit trouble. Once you're on your own, there's no guarantee of a parental safety net.
Nevertheless, you should be able to get a Visa or MasterCard in a relatively short time by following one of these strategies:
Start with the bank or credit union where you have your checking account.
Get a credit card from a retailer or department store. These cards generally aren't a good deal — even with the discounts they offer on initial purchases — because interest rates tend to be high. But retail cards are relatively easy to get.
If you pay the bill in full each month, the high interest rate won't matter. Just don't get carried away. Limit yourself to no more than two cards — one at a department store, and one at a specialty store where you know you'll shop. After six to 12 months of prompt payments, apply again for a Visa or MasterCard.
Apply for a secured card, which requires you to make a savings deposit equal to your credit line. For a listing of secured cards, go to www.cardratings.org or www.cardweb.com.
Another way for first-timers to establish a credit rating is to apply for a loan that you repay before you actually get the money. After repaying a $500 loan, for example, you'll have $500 plus a good payment record — and the rest will be credit history.
Have a question about kids and finances for Dr. Tightwad? Write to Dr. T at 1729 H St., N.W., Washington, D.C. 20006. Or send the good doctor an e-mail message (and any other questions for this column) to jbodnar@kiplinger.com.