Getting A First Credit Card: What You Need To Know
Getting a credit card for the first time can feel like a big step forward for personal finances and potentially provide you with more financial freedom or hardships than ever before.
But the criteria for credit cards and how they are used can also have a lasting affect on your credit rating and potential investments down the track, so if you are thinking about getting your first credit card, there are a few things you should know before sending off any applications.
Credit Ratings
Credit ratings created by lenders based on your credit report. Your credit report is made up of information on past debts and payments, with a particular focus on loans and other financial services.
Without a credit card history, your credit report may be quite bare, but it is a good idea to get a free copy and make sure that there are not any overdue payments for things like phone bills that could bring your credit rating down.
Both MyCreditFile.com.au and Dun & Bradstreet offer free and paid personal credit reports that may help you know what kind of credit card you are qualified for.
Credit Card Providers
When applying for your first credit card, the provider can be a significant factor for future loans and financial services.
Someone who has always banked with the Commonwealth Bank or St George, for example, will have a history with that bank that could be an advantage. In fact, if you have a poor credit history, your bank may be willing to discuss alternatives like a secured credit card or co-signed card.
Credit Card Use
Once you have a credit card, your rating will change according to how well you use the card. Many first time cardholders will be limited to basic, student or first-time credit card offers like the ANZ First. Usually these cards will not offer the lowest interest rate, but are the foundations for better credit card offers later on.
Getting into the habit of paying off the card every month is a good way to increase your credit rating so that you can work towards getting a credit card with more features, like low interest or rewards.
Credit ratings will also affect your chances for other loans, like mortgages, so planning ahead and using your card accordingly can be a big help in other areas of your life.
If you are thinking about other kinds of loans in the future, it is also good to consider your personal banking history.
While your credit rating will have an impact, banks also have access to more information and can see how well, or badly, a credit card provided by them has been used in the past.
Your first credit card sets the tone for a number of different financial opportunities later on and balancing credit card convenience with a bit of consideration will help you work towards even more benefits from credit cards and other services.