You may think that you don’t really need a credit card in your own name – after all, you and your husband pay all the bills together and it’s just as easy to use your joint credit card account. Everything goes into one account, and it’s much easier to keep track of it all that way.
But what happens if you want to say – start a business in your own name? What if you divorce? What happens if you need credit of your own? In simple terms, if you find that you NEED a credit card and don’t have any credit history – you could be out of luck.. Credit card companies are becoming more and more wary of lending money to unknowns.
Even worse, with credit histories as easily available as a phone call, it’s not just prospective creditors who are checking your credit history. Among those that might request a credit report from Equifax, Experian or TransUnion are the employer you’re hoping will hire you and the landlord that you want to rent from.
But not having a credit card at all can’t be a bad thing, can it? After all, it means you don’t have any debt in your name. Unfortunately, that’s usually not enough for lenders that you may need in the future. You’re actually better off carrying some debt with a history of regular payments. That shows prospective lenders that you have built up a history of paying your bills on time. Based on that, they can assume that you will pay bills to them on time. With no credit cards in your name, all they can say is that you’ve never had to pay your bills on time.
Isn’t it enough to have joint credit cards with your husband or wife though? What about the credit card that your parents co-signed for you? That’s credit in your name, right? Wrong. It’s very likely that any card that is co-signed or has a joint account holder will not be credited in YOUR name. When it comes time for you to apply for that loan or get that job, you may have no credit history – or worse, your credit may be linked to that of someone whose credit is not as good as you’d hope.
A credit card in your own name is most often an easy first step to establishing your own credit history. Many financial advisors recommend the following to start establishing your own credit history:
- Open a checking account in your own name.
- Get a credit card in your name.
- Use it to make small purchases monthly.
- Make regular payments on your account, on time, every month.
If you’re denied a credit card, don’t keep applying and racking up credit card denials in a short time. Those applications and denials will show up on your credit report – and the more companies that turn you down, the more likely it is that the next company will turn you down.
