Q: I am a 19-year-old freshman in college and want to start building credit, but my dad refuses to co-sign for me. Not for any particular reason, it’s just that he and I are not that close. Can I apply for a student credit card by myself?
A: You’ll be happy to hear that you actually do not need a co-signer. That was a myth that sprung up several years back when lawmakers passed the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act for short).
The law requires that issuers grant cards to consumers under 21 only if they have a co-signer — OR if they can demonstrate their ability to independently pay the minimum balance every month.
In a nutshell, you can apply for a card in your own name if you have the means to pay back the charges on your own. In other words, if you have income (and can prove it), then you may not need Mom or Dad to co-sign.
What counts as income? And how much?
The CARD Act was pretty vague on this. As a result, banks have largely came up with their own definition/requirements as to what constitutes “ability to pay” for a student. As of 2014, many will let you include the following in the amount of your income:
- Your job
- Financial support from parents
I’m not sure why the last two on the list are viewed as income, but nonetheless, many student cards allow it to be included. However keep in mind the rules may vary by issuer. The only way to find out is to apply.
You also don’t necessarily need a high income to qualify on your own. Sure, the bank might give you a card with a low limit (since it might think you can’t handle a higher one with income from a part-time job), but that’s a start. That card will help you build your credit until you ask for a higher limit later.
The bottom line: it’s possible to apply on your own
Unless you have no job and no other qualified sources of income, go ahead and try to get a credit card in your own name.
Updated August 4, 2014