Can I apply for a credit card if I only make minimum wage?

By , CardRatings Contributor

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Yes. The fact that you've got a job as a reliable source of income will help your credit card application, even if you're only making minimum wage. However, you're not likely to get an account with a huge line of credit until you can show you're capable of paying down your balance in an emergency.

As part of the Credit CARD Act of 2009, federal regulators started forcing banks to set credit limits based on an applicant's reported annual income. Banks don't have to verify your income with an employer or with the IRS. They just have to set an appropriate credit limit if they decide to open an account for you. The factors that determine your eligibility for credit include:

  • History with other creditors. Utilities like landline phones or electric service in your name can boost your credit score.
  • Recent late payments or defaults. Banks will flag you as high risk if you fall behind on your bills.
  • Economic conditions where you live. Some credit card issuers use aggregate data from your neighborhood when your credit history doesn't give them enough to go on. If your neighbors struggle to pay bills on time, a risk assessment algorithm can assume that you will, too.

If you're unable to get an unsecured credit card at this point in your life, don't worry. Save up about $300 and apply for a secured credit card from a reputable lender. Capital One, Bank of America, and Wells Fargo all offer affordable secured credit cards that don't cost much to get started.

Instead of using this card for everyday purchases, make just one small purchase every month to show activity on your credit report. That way, you'll build a stable credit history that will help you get better rates on home loans and insurance products later in life.

On the other hand, if you're just looking for the convenience and security of paying with plastic instead of cash, American Express has a great deal for you. Their latest series of no-monthly-fee prepaid credit cards includes many of the same benefits as their charge cards, such as purchase protection and roadside assistance.

American Express officials have said that the company uses data collected from prepaid card usage to help determine future eligibility for charge cards. Use your card responsibly to build strong habits around money, and to show banks you're capable of managing a monthly bill.


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