'My bank won't give me a credit card': I've never had a credit card and struggle to build credit. Is getting a Walmart card for Walmart purchases a good start?

Hi Money Minder,

How can I assist you with your financial needs today?

So, I’ve never had a credit card before, and my bank won’t give me one ’cause I don’t have enough credit history. They suggested something about getting a Walmart credit card that I can only use at Walmart, to build up the credit I need to qualify for the bank’s card. Can’t find much info on that though. Is this actually a good idea?

If not, what’s the best way for a first-timer like me to get a credit card, and what should I charge on it? I’m thinking car insurance, phone bill, and rent?.

Thanks for the guidance,

Credit Newbie

Response from THE MONEY MINDER:

Hello There,

Sure! First, let me say congratulations on taking the first steps towards building your credit. It’s a significant milestone, and it shows you’re thinking ahead about your financial well-being. Moving towards obtaining a credit card for the first time can indeed be daunting, especially if you’re unsure about the best approach.

Your bank’s suggestion about a Walmart credit card is actually quite practical. Store cards generally have more lenient approval criteria compared to traditional credit cards. They allow you to start building a credit history with less risk to the issuer, since they can control where and how you spend. Once you have some positive credit history with a store card, it could make it easier to qualify for traditional credit cards in the future.

Another solid option to consider is a secured credit card. These cards require a cash deposit up front, usually equal to your credit limit. Secured cards are designed specifically for individuals new to credit or looking to rebuild their credit, and many major banks offer these types of cards. Your responsible use of a secured credit card, such as making payments on time and keeping your balance low, can help you build a positive credit history.

Regarding your thoughts on what expenses to put on your new credit card, it’s great that you’re thinking ahead. For a first-time user, it’s generally recommended to start with small, manageable expenses. Putting recurring bills like car insurance and your phone bill on your credit card can indeed be a smart strategy. These are regular expenses you need to pay anyway, and by charging them to your credit card, you’ll have the opportunity to build up a history of on-time payments. Be cautious with rent, as not all landlords accept credit card payments, and some that do might charge additional fees.

Remember, the key to building good credit is to use your card responsibly. This means paying your bill on time every month and keeping your credit utilization low—aim to use no more than 30% of your available credit limit. Consistency over time is crucial for developing a strong credit history.

Wishing you the best on your journey to building credit!

The Money Minder