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“I can’t get a credit card because I don’t have income”

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One of my friends called me yesterday and told me she had no credit card, so could she borrow mine to make some purchase? This is the equivalent to one of Dr. Koop’s friends being morbidly obese because of only eating butter. Imagine how angry it made me!!! Anyway, I told her to get a credit card and start building her credit (more about that here), but she said that she has no income so she can’t get a credit card.

There’s an easy way around that: Get a secured credit card! These are credit cards where you put down a few hundred bucks in a savings account, and the bank uses that as collateral to issue you credit. After a few months, you can graduate to a regular (“unsecured”) credit card. To get one, call your bank and ask about it.

More about secured credit cards here.

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  1. You don’t need credit to be able to buy things. No one does!! Your credit score is nothing but a measurement of debt. Save up, pay in cash and you won’t have to worry about payments and interest rates!

  2. Yikes.
    I’m glad you advised other action.
    Nothing will screw up a friendship more than merging finances (which this is the first step towards doing).

  3. More to the point, you don’t need an income to get a credit card. Fill in an income of 0, and you’ll still probably be accepted.

  4. I filled in zero income once, and the application was rejected as “incomplete”. So I called and said it’s quite complete. It’s zero. And the woman just said, “that’s incomplete.” Maybe there was a wink in her voice. Anyhow, I stopped applying for CC’s that ask about income. Except when I have it.

    But I don’t get it: If she doesn’t have an income, how’s she going to pay off her credit card? I guess that’s her problem.

  5. “Imagine how angry it made me!!!” Probably about as mad as the flawed Dr. Koop analogy makes me. “Eating only butter” implies that your friend has been doing things to harm her credit. Maybe she has, maybe she hasn’t. From your story, all we can tell is that she doesn’t have an income. Not advisable, but a common enough circumstance, especially if she’s a student. Fortunately for both of us, we can blog about all these things and not waste our time being angry.

  6. reid: I think that not starting to build credit is harmful in the same way that not exercising is: Whether it’s active or passive, the result is still the same. When a credit-less person goes to buy a car, house, or whatever down the road, they’ll pay more. (Also, you’re right, she’s a student.)

    John: She might have money saved up…

    And armccoy seems to be a follower of Dave Ramsey, who preaches a no-debt-whatsoever policy. I completely disagree.

  7. if i had a few hundred dollars saved i wouldn’t need a credit card. do you tell someone with no car to drive themselves somewhere?

  8. ursula: You don’t use a credit card because you don’t have money! ARGH. Use it to build credit, use it for consumer protection, use it for convenience–but always pay it off at the end of the month. Read the rest of this site for more info.

  9. What complete and utter crap. Building credit is a myth. You will spend less when you pay cash for big items – more negotiating power, no interest. And a student should have no less than 12 pre-approved CC offers in their mailbox each week, because all of them do. They give CCs to dead people and dogs. Bad credit scores does not equal no CC offers.

    And, Ramit, Dave Ramsey – unlike yourself – has something called expreience. his plan works, yours is based on myths, half-truthes, knee-jerk opinions, and what your broke finance professors taught you.

    good luck with that

  10. And armccoy seems to be a follower of Dave Ramsey, who preaches a no-debt-whatsoever policy. I completely disagree.

    That’s probably okay as long as a person is disciplined enough to actually pay off the whole balance at the end of each month. However, reality being what it is, the majority of people just don’t use credit cards in a responsible way.

    And yep, I think Dave has a good common-sense approach to managing money. Saving up, sticking to a budget, and paying in cash definitely keeps you out of the financial doghouse.