How to Apply for Your First Credit Card: A Helpful Guide for Beginners

Key insights:

• A credit card is an important tool to help build your credit score, which is used to gauge your eligibility for credit cards, loans and even housing
• Before applying for your first credit card, you should check your credit report and research credit card options to find the best card for your needs and goals
• Applying for your first credit card is typically simple and requires just a few bits of personal information

If you know how to use a credit card, you may have the chance to tap into several benefits such as building credit, consolidating debt and earning reward points or miles.

However, credit cards can seem complicated if you’ve never used one before. If you’re wondering how to get a credit card for the first time, this guide will help you ask the right questions to choose your first credit card.

How to choose your first credit card

There are many credit cards to choose from, including several starter credit cards designed for beginners. Before applying for your first credit card, there are some steps you can take to prepare:

Check your credit report

Before applying for a credit card, it’s a good idea to develop an understanding of your creditworthiness. You can do this by checking your credit report. You can check your credit report from each of the three major credit bureaus once a week.

Your credit report shows your history of past loans and other reported payments (or missed payments), and it serves as the foundation for your credit score. One Consumer Reports study found that nearly half of participants had mistakes on their credit reports, so it’s important to check for errors before you apply for your first credit card.

Compare credit card types

There are several types of credit cards, each of which may be worth some consideration depending on your situation:

• Rewards credit cards: These cards offer a percentage of your purchases as rewards, such as cash back, points or miles. Depending on the card, you can redeem these rewards for benefits such as statement credits, gift cards, flights, hotels and car rentals. Some cards also offer additional perks and benefits, but often carry an annual fee.
• Secured credit cards: About 13% of credit card applicants are denied, according to the Federal Reserve Bank of New York’s Survey of Consumer Expectations (SCE). If you have a limited credit history, you may have a better chance of being approved for a secured credit card. With a secured card, you typically put down a security deposit, which serves as collateral. The deposit is generally equal to the card’s credit limit and is usually refundable when you close the account or upgrade to an unsecured card. Secured cards are good tools for helping to rebuild or establish credit.
• Retail or store credit cards: Credit cards co-branded with retailers offer discounts or rewards at specific stores.

Different types of credit cards may have less strict eligibility requirements or offer benefits that are best suited to your needs.

Whether you’re new to credit cards or looking to upgrade, there's a Citi^® card for you. View All Cards

Match card benefits to your needs

In many cases, a credit card’s primary benefit is simply helping you to build a stronger credit history and improve your credit score.

If you are interested in applying for a rewards credit card, consider one that offers additional rewards for the types of purchases you typically make or for shopping at vendors you frequent. For example, if you enjoy dining out, look for a card that offers rewards for making purchases at restaurants.

Limit the number of applications

A card application typically triggers a hard credit inquiry. A hard inquiry can cause your credit score to dip by a few points, impacting your credit score for up to a year. This means your credit score can take a small hit with each credit card application you file. While this decrease isn’t typically significant for one credit card application, applying for many credit cards in a short period can cause your credit score to drop significantly. It can also signal to credit card issuers that you may be taking on more debt than you can handle.

Instead of applying for cards over and over, consider pre-qualifying for offers to get an idea of whether you’re likely to be approved for different cards. Pre-qualification doesn’t trigger a hard inquiry.

Review terms and conditions

Always read a card’s terms and conditions before applying. Some of the things you'll want to look for include:

• Annual percentage rate (APR): A card’s APR is the total annual cost of borrowing. This includes both the interest rate and fees.
• Interest rates: Credit cards typically have different interest rates for purchases, balance transfers and cash advances. While you won’t transfer a balance to a first-time credit card, it's a good idea to know all of a card’s terms.
• Repayment terms: Make sure you understand the credit card’s billing cycle and the grace period — the interest-free time between the end of the billing cycle and the payment due date.

What information do you need to apply for your first credit card?

Applications typically ask for specifics like your legal name, Social Security number, gross annual income, current address and phone number. Before applying, you may want to gather documents like your government-issued I.D. and Social Security card for reference.

What to do if your application is denied

It's not uncommon for a credit card application to get denied. There are several reasons why this could happen, including:

• Insufficient credit history
• Low income
• No employment
• Missed payments
• Excess debt
• Too many credit inquiries

While all these factors could play a part, federal law requires credit card issuers to tell you why you were denied. An adverse action letter is a document that must be sent to you whenever you’ve been turned down for a loan, credit card or job because of information in your credit report. It should provide the reasons why you’ve been denied, as well as the credit score used and a notice of your right to a free copy of your credit report. Once you understand the reasons why you’ve been denied, you can get an idea of what actions to take to increase the likelihood you’ll be approved next time.

When you’ve received an adverse action letter, it can also be helpful to check your credit report. This may give you a better picture of what factors are holding you back. It’s also a good opportunity to check for errors in your credit report.

Tips for first-time credit card users

A credit card is a major responsibility. Managing it well can help you qualify for lower interest rates, better rewards and more financial products as your credit improves. Here are some tips for responsible credit card use:

Make your payments on time

Making at least the minimum payment by the due date each month can allow you to avoid penalties for late payments, such as late fees or higher interest rates. To avoid interest charges on new purchases, focus on paying the full statement balance by the due date each month.

Timely payments can help you avoid penalties, and paying the full statement balance (or as much as you can) by the due date each month can help keep your balance manageable. Plus, regular on-time payments are a major factor in your credit score.

Keep your account balance low

Try to keep the balance on your credit card low. It’s generally recommended to keep your total credit utilization ratio, which is the amount of credit currently in use divided by your total credit limit, below 30%.

Having a high balance on your card could also mean you won’t be able to pay your full statement balance by the due date each month. Carrying a balance into the next cycle typically means you’ll be charged interest on whatever balance amount is carried over into the next billing period. In addition, carrying a balance may impact your credit score.

Stick to a budget

Getting a new credit card doesn’t mean your budget changes. Having a budget and monitoring your spending can help you observe responsible financial habits. Sticking to a sound plan will help you spend within your means and avoid unnecessary expenses, which could make paying off a credit card balance easier in the long run.

Check your monthly statements

Your credit card’s monthly statement will show the statement balance, which is the total amount you owe on your credit card as of the last day of your previous billing cycle. The monthly statement should also provide an accurate picture of the payments made and charges, including interest and fees, incurred during that billing cycle.

Your statement can help you understand your monthly spending habits and whether you’re sticking to your budget. Checking your statement is also a good practice to help you could find transactions you don’t recognize that may be fraudulent.

Be aware of credit card fees and interest charges

Read the fine print and understand potential fees or interest charges. Understanding fees and interest can help you avoid or keep them to a minimum.

Credit cards offered by Citi

Secured cards like the Citi^® Secured Mastercard^® can be a great choice if you’re looking to apply for your first credit card. If you’re looking for rewards, cash back cards like the Citi Double Cash^® Card may be a good option. Whether you want to use a secured card to help build up credit or a card that earns cash back on everyday purchases, these credit cards from Citi are a great way to get started.

Apply for your first Citi credit card today.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.