Laura Lee got her first credit card during the freshman Welcome Week at Central Michigan University.
“[Representatives] sat at a long table in the Student’s Union just outside the large conference room with displays from all the on-campus student organizations,” she tells MainStreet. “[I could] sign up for a Sears card, get a $5 gift certificate and a tote bag full of gifts.”
The opportunities to take on credit didn’t end there, however. Weeks later, applications from Citibank, Discover Card, J.C. Penney and Chase started appearing in her dorm room mailbox. By the holiday season, Lee’s wallet was bulging with plastic.
“They all welcomed this 18-year-old consumer with open arms,” she says.
Of course, credit issuers aren’t giving out cards quite so readily these days. Under the CARD Act, companies are now prohibited from issuing credit to anyone under 21 unless the applicant has a stable source of income or a willing co-signer. But college freshmen aren’t the only ones faced with roadblocks when trying to establish credit.
“If you’re older, outside college age, and don’t have credit history, it can be surprisingly tough to get a card,” Gerri Detweiler of Credit.com points out.
Regardless of these difficulties, credit virgins aren’t forced to live a life of celibacy. They just have to shop around.
Prospective first-timers have two basic options when it comes to pursuing a creditor. They can use a co-signer to obtain a prime line of credit, or they can individually obtain a secured credit card, which requires customers to put down a sum of money upfront that will match their line of credit and subsequently minimize default risks. (Check out this MainStreet article for more information on secured cards and other options for building/rebuilding your credit line.)