Can’t Get a Credit Card as a New College Grad? Here’s an Option to Look at Instead

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Denied a credit card? All isn’t lost. Read on to see why. 

It’s not uncommon to graduate college without a credit score. After all, if your parents have paid all of your bills to date, then you may not have any sort of credit history in your name. And without one of those, it’s difficult to get a credit score assigned to you.

But if you don’t have a credit score, then chances are, you won’t be able to qualify for a credit card, either. Credit card companies need to make sure they’re extending credit to borrowers who are likely to make good on their debts. If you don’t have a credit score, there’s really no way for a credit card company to gauge the risk associated with letting you borrow.

If you’ve been denied a credit card after college, you should know that a secured credit card could help you build credit. However, it won’t actually give you buying power, which is what you might really be after. If that’s the case, here’s another option worth looking at temporarily.

Could your parents’ credit card become yours?

Experian reports that an estimated 28 million Americans are credit invisible. If you fall into that category, getting your own credit card may not be feasible. But in that case, you can ask your parents (either one or both) to add you as an authorized user to a credit card of theirs.

As an authorized user, you get to swipe your parents’ credit card (specifically, your own version of it) wherever it’s accepted. And that means that if you need to cover a $40 restaurant tab and you don’t have the cash in your wallet or the money in the checking account linked to your debit card, you can charge that expense on that credit card instead.

The upside of being added as an authorized user on a credit card, aside from the buying power, is that positive activity associated with that account could help you build up a good credit score. So for example, let’s say you get added to your parents’ card, and they pay the associated bill on time and in full month after month. That activity will count as yours for credit scoring purposes.

Of course, the downside of being added as an authorized user to a credit card is that if the people in charge of that account (in our example, your parents) are late with payments, that activity will be associated with your credit history, too. Only that’s not positive activity, so you might have trouble establishing a favorable credit history.

It’s important to follow the rules

Being an authorized user on a credit card is really a privilege, and it’s one you don’t want to abuse. If your parents allow you to go this route, follow their rules. If they give you a spending limit of $300 a month so they can still pay their bills, stick to it. And if their limit doesn’t work for you, be prepared to pay the difference.

Remember, if you rack up lots of charges you don’t cover and your parents can’t afford to pay their bills because of that, it’s not just your credit you might ruin as you’re trying to build it up. You might also wreck your parents’ credit. And that’s hardly fair.

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