Your child can apply for their first credit card at 18 years old and from a financial perspective, that’s exactly what they should do so they can start building their credit early on. However, even if they have not turned 18 yet, there are plenty of reasons why it is important to consider the feasibility of their credit card application from a young age.
There are a plethora of factors that go into deciding whether any given credit card application is accepted or denied. We understand that this blog is likely going to shape up to be very negative in tone, but we hope you understand that we value finance discussion from all angles, and sometimes a blog like this is simply just necessary.
Read on for our top three reasons a credit card application may be denied.
1. Low Credit Score
A credit score is an indication of your credit risk, otherwise described as a measure of your likelihood to pay bills on time. Too low of a number in this department, typically a three-digit number between 300 and 850, may mean a credit card application is denied based on an issuer’s perception of your level of trustworthiness with respect to paying back your credit in a timely fashion.
2. Insufficient Credit History
Too short of a credit history can result in negative consequences for your credit card application because it will be harder for an issuer to determine your creditworthiness. Much like the point made above regarding low credit scores, credit card issuers put a lot of focus on how much they can trust you to pay back credit and too little of a precedent for them to look back on might mean that they say no when you try to get a credit card through them.
3. Low/Unstable Income
Finally, again, credit card issuers are keen about your ability to pay back the credit you use. Truthfully, that is the entire purpose of the card. Therefore, another way they assess your viability for a card is your income and an unstable income or a low one would make it harder to pay back a creditor, diminishing the level of trust that issuers may have in you as a potential card recipient. No trust likely equals denial.
That’s all for this blog, because we don’t want to have too much negativity in one piece of content. Also, please keep in mind that despite what we’ve indicated above, there are always ways of getting around these potential barriers. A secure credit card or one designed just for a student (if you are getting a card for your young child) might be a better option than a traditional card in these situations.
All told, there is no denying (sorry if that was a bad choice of words) that getting a credit card is an important part of everyone’s personal financial journey, whether you are an adult reading this post now or you are thinking about your young child, who will be facing this reality soon.
We’ve got nationally and internationally-acclaimed programs in this area for children in grades one all the way to grade twelve, covering topics from the basics and history of money to the stock market and global finance, so we encourage you to check them out and sign your child up as soon as possible!