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Are first credit cards important for credit history?

Teen Learns That First Credit Cards Are Important For Credit HistoryJust like all credit cards, first credit cards are extremely important for credit history. If you are using a credit card for the first time, there are many things that you need to be aware of that can affect your credit history, both positively and negatively.

Use the online credit card finder to search for the best options for your first card

If you are young when you get your first credit card, you have not had a chance to build up a history of credit, which will affect you negatively. Having a credit card is a start to building up credit. How you treat the credit card will determine whether your history will be good or not.

Why is it important to have a credit history?

These days, there are many things that are determined based on your credit history. Besides credit card approval and interest rates, other things that your credit history affects are:

  • Car loans
  • Apartment lease approval
  • Mortgage loans
  • Car insurance rates

In order to get through life smoothly, it is important to have a credit history, and even more important to have a good credit history. A credit card is a good start.

How does a credit card improve your credit history?

Your credit history is directly related to your credit score. Your credit score is what many companies and financial institutions use in determining your financial responsibility. Without a history of credit, you will not have a very good score.

The importance of your first credit card is to show that you can pay a loan back responsibly. When you make a purchase with your credit card, you are basically taking a loan from the credit card company to pay for it and then you owe that money back when you pay your credit card statement every month.

When you pay that loan back every month and pay it on time, it shows that you can be financially responsible, which will help you in the future for other loans. Keep in mind that in order to build a history of credit, you will need to continue to pay your credit card bill month after month before a history is considered.

What other things can positively affect your credit history?

Along with having a credit card that you treat responsibly, there are other ways to improve your credit history and, in turn, your credit score. If you drive and have a loan on your car, you will increase your credit history by paying your loan every month.

Again, because you may not have a history of credit, you may find that it is more difficult to get a car loan, especially one without high interest rates. If you have someone that will cosign the loan for you, you will enjoy lower interest rates and you can start improving your credit score by paying the loan back.

What if my credit history does not allow me to get a credit card?

There are quite a few credit cards out there that are specifically meant for those with little to no credit history. They won’t be fancy rewards credit cards and they will probably have limited credit limits, but they are out there.

If you are unable to find a credit card because of your limited credit history, you may want to look into getting a secured credit card. These types of credit cards are meant for those with little or poor credit.

Secured credit cards work in that the credit limit is backed by collateral in the form of cash. They work a couple of ways. Some banks will allow you to get a card and deposit a certain amount of money onto the card, so it is rather used like a gift card or debit card. You can only spend the amount of money you put on the card.

Other financial institutions will have the secured credit card linked to a savings account. The amount of money you can spend the card on is equal to the amount in your account. Some secured credit cards have an annual fee or other fees, while some don’t. Smart Money has advice on how to compare credit cards under the tools section, which may help you with your credit card search.

You can also search for and compare credit cards right now by using the credit card chaser tool.

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Disclaimer: This content is not provided or commissioned by American Express, Visa, MasterCard, Discover, or any other credit card company or issuer. The opinions expressed here are the author's alone, not those of any credit card company or issuer, and have not been reviewed, approved or otherwise endorsed by any credit card company or issuer. Credit Card Chaser may be compensated through various affiliate programs with advertisers. As always, Credit Card Chaser is an independent website commmitted to helping people research credit card offers and find the best credit card!

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