Credit cards are an essential part of most people's day-to-day lives. But if you don't have a job, you may wonder if you are eligible to get one. Learn whether you need a job to get a credit card and how to get one without a job.
Yes, you can get a credit card with no job, but it may be more challenging. If you have a good credit score and an income source other than a traditional job, you should be easily approved. Without any income source, you may need a cosigner or a secured credit card, but options still exist.
Learn more about what credit card issuers look for, as well as how to get a credit card without a job.
Can I Get A Credit Card With No Job?
There are many reasons you may not have a job but want a credit card. Maybe you just need a way to pay for unexpected expenses while between jobs. Or maybe you don't have a traditional job but have passive income or investment income. Maybe you are a stay-at-home spouse. In any of these cases, it is common to wonder whether you can get a credit card without a job.
The short answer is that yes, you can. That being said, your options may be slightly limited depending on your income, credit score, and debt-to-income ratio.
Credit Card Issuers Have To Consider Your Ability To Pay
The biggest challenge when you apply for a credit card without a job is that credit card issuers have trouble assessing your ability to pay. This is important because the Credit Card Act of 2009 requires credit card issuers to evaluate whether you will be able to pay. That requirement was designed to prevent people from signing up for debt, whether credit card debt or mortgages, that they have no feasible way of paying.
You Can List Other Income You Have Access To
The good news is that the same Credit Card Act of 2009 also expands what you can list as income. Essentially, as long as you have a reasonable expectation that you have access to that income, you can list it. This means that even if you don't have a job, you may be able to list a fair amount of income on your credit card.
This can potentially be enough income to get you approved without an issue, regardless of your employment status.
The following are some of the income sources you may be able to list:
- Income from self-employment
- Your partner or spouse's income
- Unemployment benefits
- Investment returns
- Distributions from a retirement account
- Social security payments
- Public assistance
- Regular deposits or gifts from someone else
Credit Card Issuers Look at More Than Your Income
As mentioned, there may be some flexibility in terms of your income when applying for a credit card. This is partly because credit card issuers will look at more than your income. They will also pay attention to your credit score and debt-to-income ratio.
This is the three-digit number that creditors and lenders use when deciding whether to approve you for a credit card or a loan. Generally, a score of 670 to 739 will be good, and a score of 740 to 799 is very good. If your score is 800 or higher, it is excellent. If it is 580 to 669, it is fair.
Another major factor credit card issuers will consider your debt-to-income ratio. As the name implies, this is the percentage of your income that goes to debt payments.
Should You Get a Credit Card If You Don't Have a Job?
The fact that you can get a credit card without a job doesn't necessarily mean it is a good idea to do so. This will depend entirely on your financial situation. If you are confident that you will be able to pay it off monthly, go ahead.
If, on the other hand, you need a credit card to pay for essentials, you should consider other options. If you don't pay off the monthly balance, you will quickly accumulate interest. It may be smarter to dip into your emergency savings or ask a family or friend for a loan. You may also want to compare interest rates on a personal loan, although that will not necessarily be a better option.
Look for Low Interest Rates, Especially If You Are Unemployed
Suppose you decide to go ahead and get a credit card while unemployed; make sure to prioritize a low-interest rate whenever possible. There are two main approaches you can take with this.
You can look for a credit card that has a low-interest rate and keeps it low. Remember that a "low" interest rate for a credit card will not necessarily be better than the interest rate you get for a personal loan. You need to compare shops.
The other option is to get a credit card that has a 0% introductory APR. You can likely find a credit card that doesn't charge interest for the first 12 or even 18 months of use. This can be a good option if you are confident that your current financial struggles are temporary. Just make sure it is a 0% APR offer and not a deferred interest offer, and pay attention to the interest rate after the promotion. Not checking either of those things can lead to a nasty surprise in a few months.
Not Approved Without a Job? Here Are Some Alternatives
Unfortunately, while you can be approved for a credit card without a job, that is not always possible. It is especially hard to be approved if you have a low credit score and don't have any other source of income.
If you are denied on your credit card applications but still need a credit card, you can consider getting a secured card or a cosigner.
Secured Credit Cards
Getting a secured credit card is an excellent alternative to getting a traditional one. These carry significantly less risk for the credit card issuer, so they are much easier to be approved for. With a secured credit card, you make an initial deposit, and that becomes your limit. This way, if you get behind on payments or default, the credit card issuer will just keep your deposit. Since you couldn't have spent more than that, they don't lose money.
When you close your secured credit card, the deposit is returned to you. You may also be able to upgrade your secured card to a normal one with the same issuer after on-time payments for a certain amount of time. You would receive your security deposit back at this point.
As a bonus, secured credit cards are an excellent way to rebuild your credit.
Get A Cosigner
If you want a traditional credit card, then the best option is to get a cosigner. This will also help you build your credit, assuming you make on-time payments. Your cosigner will need to be someone with a steady income and a good credit score. You essentially get to take advantage of their good financial standing to get a credit card.
The important caveat is that the person who cosigns your card is also responsible for paying it. So, anyone willing to cosign will be accepting the fact that they have to pay your balance if you don't. More importantly, late payments will negatively impact their credit score just as much as yours.
As such, cosigning for a credit card is a very significant favor. That means the most common cosigners are spouses, significant others, or parents.
Become An Authorized User On Someone Else's Card
If you don't necessarily need your own credit card but need to have access to one, another option is to become an authorized user on someone else's card. Like cosigning, this requires a high level of trust from the person with the card.
As an authorized user, the credit card holder is legally responsible for the balance, but you are allowed to use the card. You could theoretically rack up a large balance, and they would be responsible. As such, this is also a big risk for them.
There are, however, some restrictions available for authorized users on some cards. For example, depending on the card issuer, they may be able to give you a monthly limit that you two agree on.
Evaluate If a Debit Card With Credit Card Features Is Enough
You may also want to rethink whether you really need a credit card. Why do you need a credit card? Is it because you want to earn cash back and other rewards? Or do you want to be able to make online orders? You can do both of these things with some debit cards.
Buy Prepaid Visa Gift Cards
For situations when you really need a credit card but can't get one, consider a prepaid Visa gift card.
Keep reading: Can 16-Year-Olds Get Credit Cards? [CREDIT CARDS]
It may be harder to get a credit card if you don't have a job, but it is not impossible. This is especially true if you have a good credit score, minimal or no debt, and/or other income sources. If you can't get a traditional credit card, consider a secured credit card or getting a cosigner.
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Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author. He's been featured on The Consults Corner on TAE Radio, The Writing Biz, What's Your Story, and more.