NEW YORK (MainStreet) — Until Sean McCarthy, 21, signed up for a credit card last year, he was invisible to credit bureaus.

People who don’t have any credit cards are basically “credit invisible,” said Jeff Golding, CEO of WilliamPaid, a Chicago company that allows people to build credit through paying their rent online. “While they may have a good job, a solid income and pay all their bills on time, no one knows that.”

McCarthy’s attitude about credit cards is akin to that of a large percentage of Millennials - more than one in three 18- to 29-year-olds have never had a credit card, according to a report.

Their outlook on obtaining credit and debt is not surprising, since they were “forged during the Great Recession and in the apocalyptic job market that they and their friends have faced,” said Matt Schulz, a senior analyst for, an Austin, Texas, credit card comparison company. “That skittishness has pushed them away from credit cards towards debit and prepaid cards.”

Since the CARD Act was passed in 2009, it placed strict limitations on marketing and issuing credit cards to young adults. Consumers who are younger than 21 must demonstrate their proof of income to be able to pay the debt incurred on card loans.

“As their careers advance and the economy continues to improve, I expect Millennials to transition to credit cards in search of greater rewards and consumer protections,” Schulz says.

The survey also asked when Americans believe someone should get their first credit card in their own name, and the average response was age 22. One-third of Americans say 18- to 20-year-olds should have their own credit cards.

According to the survey, 47% of credit cardholders got their first card before age 21, including many people who got them before the CARD Act took effect, and 68% signed up before age 25.

The negative comments about credit cards from teachers, friends and family made McCarthy, a social media coordinator in Camarillo, Calif., hesitant about getting his own card. What he learned was that none of them discussed that all the reasons they disliked credit cards were the result of having bad credit habits.

After McCarthy started looking at apartments, he became aware “that it's nearly impossible to get a loan without proving yourself to potential creditors as an economically healthy individual.” He has also learned that having a credit card has “become good practice for paying bills on a regular basis.”

Good credit needed to rent an apartment

Most people don’t know they need credit until they get turned down when trying to rent an apartment or buy a car or auto insurance.

“They are already behind the eight-ball, because they can’t prove to anyone that they are a low risk,” Golding says.

Not having a credit card means those consumers lack having a credit score, since credit bureaus cannot see a history of the consumer paying their debt on time.

“Not having a score can be worse than having a bad score,” Golding says. “If it is bad, the credit bureaus can see some history and get their arms around the risk. Otherwise, it’s like throwing a dart.”

Millennials need to open and use a credit card “actively, consistently and responsibly each month to build a seasoned credit history,” says Joe O’Boyle, a financial advisor with New York-based Voya Financial Advisors. Nowadays, even more employers are looking at credit reports when they are interviewing potential employees.

“Having a credit card and developing a track record of paying off credit card balances each month can be a good career move,” he says. “Actively use your revolving debt over time, because the more seasoned your credit history, the better your credit score.”

Higher credit scores equal lower interest rates

High credit scores help consumers get lower interest rates for auto loans and other credit cards and other bills such as your insurance.

While some Millennials are proud of the fact they have no credit card debt because they have never owned a credit card, the outlook is misleading, says Jason Steele, a credit card expert for, a Charleston, S.C., credit card comparison company.

“A better approach would be to use credit cards, but very conservatively,” he said. “If you have a perfect record of payment and no debt, it doesn't matter if you only use the card once or twice a month.”

Options for consumers who want to get a card

Consumers who have been unable to get a traditional credit card should start by applying for a secured credit card, Golding says. Secured credit cards require the owners to first pay $300 or $500, the amount they are allowed to borrow against. After six months to a year and a record of paying bills on time each month, the issuer will give the consumers a chance to raise it.

Establishing a good credit history early on is important because most lenders “require several years of proven credit judiciousness to provide a mortgage, and waiting could cost them,” says John O’Donnell, an instructor for Online Trading Academy, an Irvine, Calif., offering personal finance and investing classes.

Steering clear of the issues associated with credit cards, such as not paying off your balance, is prudent; but avoiding them does not help you in the future when you are ready to make larger purchases.

“You’ve got to be in the game,” says J.J. Montanaro, a certified financial planner at USAA, a San Antonio financial institution. “While it’s not the only factor that an auto dealer or another lender will use to gauge their willingness to lend you money, it’s a big one. If you haven’t used credit and aren’t a part of the system, you could be putting yourself at a disadvantage.”

— Written by Ellen Chang for MainStreet