Get a Credit Card when You Have a Low Income!

How to Get a Credit Card when You Have a Low Income

There are many ways to obtain a credit card. In fact, obtaining a card is dependent on your past credit history, as well as your income. But if you do need a little "income boost" to get through the application process, here are some things you can do.

Steps

Tips and Warnings

1. 1
   Before applying for any type of credit, it helps to know where you stand ahead of time. Aside from just income, creditors look at things like your debt ratio to determine if you can afford the amount of money they are loaning you. Debt ratio is determined by comparing the amount of money you make per month versus the amount you spend per month.

   
   

   
2. 2
   Obtain a credit report from one of the credit bureaus. You can use either Experian (888-397-3742), Trans Union (800-916-8800), or Equifax (1-800-685-1111). You can also take advantage of http://www.annualcreditreport.com to obtain your free yearly report. Make sure everything, past creditors, balances owed, late payments, etc. is accurate. With that out of the way, you can begin the application process.

   
   

   
3. 3
   Figure out how your debt ratio looks. If you make $1,000.00 a month and spend $975.00 a month, you have a very high debt ratio because you are spending nearly 100% of what you make, with no cushion. Creditors will be skeptical about loaning money to you. You can fix a troublesome debt ratio either by a) making more money or b) eliminating some expenses. Sounds easy enough, right?

   
   

   
4. 4
   Making more money might sound like an obvious solution, but it is probably not the easiest. However, keep in mind that credit card applicants can no longer use Household Income as their income after October 1, 2011.^[1]

   
   

   
5. 5
   If you have a spouse, consider whether or not his or her money would go toward the monthly payment should you get in a jam. If the answer is yes, then you can viably include that income in the total. Many times this is sufficient, as it can take your measly $12,000.00 a year to about $24,000.00 a year, a significant difference! The same principle could be applied to parents or even long-term roommates if needed.

   
   

   
6. 6
   If you live alone, think of all the little ways you make extra money throughout the year. Maybe you have a musical talent and get occasional gigs at the local bar. Maybe you're a diligent eBay-er. Maybe your neighbor is sometimes slipping you a twenty to mow her puny little lawn for her. While these are not million-dollar enterprises, a lot of littles can go a long way! Fifty here, a hundred there, twenty here, ten there; right there is almost $200. Estimate your side jobs for the next year and include this in your annual income.

   
   

   
7. 7
   Increase your odds at low-income credit attainment by reducing your expenses. Look at your credit to see if there is anything listed that is not a necessity right now. That jet-ski you pay $100 a month for that you haven't used since two summers ago, for instance, probably isn't a matter of life or death, so get rid of it. Don't worry, they'll still be making jet-skis in three years when you can actually afford one.

   
   

   
8. 8
   If you already have credit cards, consider transferring some of the balance of higher interest cards to lower interest ones, which will save you money on your minimum monthly payment. Keep in mind it looks good not to have all your credit lines maxed out, so try to avoid piling everything onto one card if it is going to fill it up. The best practice is to keep your payments split among different credit cards. This keeps your debt ratio low and helps increase your credit score faster.

   
   

   

   • If you have cards with different limits, move your debt around so that your debt to limit ratio is low on every card. Say you have $500 of debt on your American Express card with a $1,000 limit, as well as $300 of debt on your Visa card with a $4,000 limit. Your AmEx card has a debt to limit ratio of 1:2, which is pretty high, while your Visa card has a debt to limit ratio of about 1:13, which is pretty low. Try moving $400 of debt on your AmEX card over to your Visa card so that your new ratios are 1:10 and about 1:5.
9. 9
   If you don't have a checking account, open one. Even if you can only put $30 in it. Many creditors will frown on applicants who don't even have a viable way to pay their bill. Once you've got that done, open a savings account. Again, even if you can only put $10 in it. The credit card application will ask you if you have one or both, and having both is really good; it makes them think that you must have money leftover, tucked away in case of emergency. They don't have to know there's only $10 in it, and luckily, they don't ask!

   
   

   
10. 10
    Get all your facts together and get ready to apply. Applying online is much easier, and less intimidating. Those credit card phone reps are just reading a script, and they read so darn fast it makes you confused! Plus, many sites will give you your answer right away.

    
    

    

    • You'll need personal info like name, social security number, mother's maiden, etc. Then you'll need financial info, especially how much money you make, what type of accounts you have (checking/savings), how long you've lived at your current residence (it helps if you've been there a year or longer), and the like. Having it all on hand ahead of time save frustration at having to dig for something new at each new question.
11. 11
    Once you've filled out the application, submit it and await a reply. With lower income, if you are approved, it will probably be for a lower credit line (sometimes only $300) until you've proven yourself as a responsible customer. Pay on time every time. Pay more than the required minimum, and before you know it, your new credit card company will have you flashing plastic wherever you go.