Q: Hey so I know cards for college students are easier to qualify for, but in 2014 will they approve you with no income or job?
A: Stick with me here, because the answer isn’t always black and white.
How it used to be…
Before the credit card reform (which went into effect back in 2010) there were no laws requiring a student to be employed or have a source of income.
So whether to approve or deny someone without a job was totally up to the card issuer. And yes, as you can imagine, most approved students even if they had $0 income (hmm… I wonder why!).
How it is now…
The reform changed a lot. Credit card companies no longer market on college campuses, nor can they offer freebies like pizza coupons and T-shirts for applying (just ask anyone who went to college in the 1990’s or 2000’s, they’ll remember getting bombarded by these offers).
The qualifications/requirements to get approved are also different now. You have to qualify one of two ways:
- Under 21 with zero income: If you fall into this group, you need to have another adult (i.e. parent) co-sign on the credit card application for you. However the definition of “income” can vary, which brings us to the second way to qualify…
- Independent means of repaying the credit card: You can still apply for a student credit card and get approved without a co-signer, if you have an independent source of income or other means of repayment. This is where things are not always obvious, because many banks allow students to count parental support and even scholarships as income on the application.
So ultimately the answer seems to depend upon the bank’s definition of income. It may be possible to get a student credit card with no job/traditional source of income, if you still have money coming in through another source that meets the bank’s requirements.
Does this even make sense?
Not really, or at least not in my opinion. I don’t think the spirit of the new laws were to allow students to qualify for cards just because they have scholarships or parental support. Because doesn’t almost everyone have at least one of those things?
Despite being illogical, that currently seems to be the way it is with most issuers, as I have heard from many on the forum who have been approved even though they didn’t have a regular job.
In fact, I called up customer support (or used online chat) with several leading banks and they all told me it was okay to include scholarship income and financial support from parents, if I wanted to.
So what’s the next step?
If you’re currently enrolled in an accredited four-year college or university and are planning to apply for a card with no job, first of all make sure you have a qualifying source of income. Remember the rules for what income sources count can vary by issuer, so read the fine print on the application to make sure you are doing things by the book.
However, before you even do that, ask yourself… will I have the willpower to keep my spending in check? Even if you can qualify without a co-signer, it doesn’t mean you should necessarily get a credit card if you don’t think you can handle it responsibly. If you think you’re prone to problems, then consider a secured credit card where your line of credit is tied to a $200+ security deposit you will have (that way you can’t spend more than you have). This would be a better choice than simply relying on a prepaid debit card or a debit card tied to a checking account because a secured credit card will still allow you to build credit in your name.