If you’re a student and interested in starting to build credit, a student credit card can help. There are quite a few options out there, and applying is easy. That is, if you know how to fill in key information.
One key piece of information for your application will be your income. Income will play a big part not only in whether you get approved for a card, but also what credit limit an issuer provides. This may present an obstacle if you’re a full-time student, so it’s important to know what counts as income to give you the best chance of getting that new credit card.
What can a student include as income when applying for a credit card?
Credit card issuers want to know your income so that they can make sure you’re able to keep up with payments on your credit card. Your income will also likely determine how big your credit line will be. If you’re a student, you may have no income or may only be working part-time with limited income to claim.
However, as a student you can claim more than just your own income from a job. You can also include any help you may receive from your parents. For this help to count as income it must be something that your parents regularly deposit into your bank account. This can be an individual account or a joint account with your name on it.
You can also count financial aid towards your income. Just note that you can only count what is left over after you pay your tuition and other school expenses.
What is the minimum income to be approved for a credit card?
There’s no set amount of income that will guarantee approval for a credit card. When your issuer looks at your income, it is to determine whether you will be able to afford payments on your credit card. That comes down to how much disposable income you have after paying for necessities, like rent. This disposable income could be as little as $100 or it could be more.
A higher income will give you a better chance of being approved for a credit card because it’s associated with more disposable income to handle a monthly payment. A higher income will also likely lead to you receiving a higher line of credit. The assumption, again, being that you will be able to handle the extra financial burden.
It’s important to be honest about your actual income. Remember, a line of credit can very quickly turn into a debt if you can’t afford to pay it off. It’s important to have a line of credit that is within your financial means. Misrepresenting your income is also illegal. If you do so and are caught, you could be prosecuted.
Alternatives to a credit card
Before applying for any credit card, it’s important to do your research to make the best choice for your financial needs. Applying for a student card is a great way to get started with credit, but it isn’t your only option. Here are a few other options to consider.
Get a co-signer
If you are feeling like you want to start with credit, but want a bit more support, look for someone to co-sign on a credit card for you. A co-signer takes on equal responsibility for your credit card and can offer their income for your application. The co-signer will also have equal responsibility for any charges and payments on the card. Not all credit card providers will allow for co-signers, so check to make sure this is an option for your desired card first.
Become an authorized user
Becoming an authorized user on someone else’s credit card is a bit easier than getting a card with a co-signer. It will give you access to a shared line of credit and will also help you build up your credit score. The primary cardholder remains responsible for making any payments on the card, and their positive financial habits can give you a financial boost without you actually having to do anything. However, if the primary cardholder falls behind on payments, your credit score will likely take a hit, too. Be sure to set up clear guidelines for what your responsibilities will be to the primary cardholder before you are added as an authorized user.
Get a secured credit card
Getting a secured credit card is an option if you want to have your own credit card account but don’t have a strong credit history yet. You apply for a secured card in the same way you would a traditional credit card. However, there are some important differences. For starters, it is easier to get approval for a secured credit card because you’ll be required to make a deposit. Your credit line will come from this deposit, which is refundable at the end of service. It may sound similar to a debit card because it is. The difference is that a secured credit card will show up on your credit history, and a debit card won’t.
Get a debit card
Having a credit card is a great way to build credit, but now may simply not be the time to get one. Being a student, you have lots of responsibilities. If you don’t want to add a credit card payment to that list, getting a debit card is the way to go. Most debit cards can be used to make card payments and purchases online. You will just have to make sure you have the cash in your account for any purchases you want to make. You won’t, however, have to worry about paying anything off at a later date. You also won’t have to worry about added interest on any of your purchases.