Editorial Policy

I Receive Welfare. Can I Still Get a Credit Card?

Erica Sandberg

December 7, 2012

QDear Erica,

If I’m on federal assistance, can I get a credit card? I do not have a job, but I do get a check for assistance and food stamps and Section 8 housing. What kind of credit cards am I eligible for, and how do I get them? I will be traveling outside of the country and need a credit card, and have not had one yet. Thank you for your help. — Canh

ADear Canh,

It’s true that credit cards are ideal for travel-related purchases. From buying plane tickets online to reserving cars and hotel rooms, they just make sense because of the protections they offer. Not only is charging safe and convenient, it makes having a considerable amount of cash up front unnecessary.Ask Erica

There are other great reasons to have and use plastic, too. With it, you begin a traceable pattern of managing credit. If you use your card responsibly, you’ll have a positive record. When you have that, other banks will take note, and you’ll be more apt to qualify for inexpensive loans and premium credit cards. A great credit report can even help with securing tenancy, a job and a low-rate insurance policy.

So can you get your first card with neither a credit history nor a job? Maybe. But it probably won’t be the type you’re hoping to get — one with a large credit line and that doesn’t require collateral or a co-signer.

Think about these products from a lender’s perspective. By issuing you a line of credit (the amount of money you’ll be allowed to spend when you get the card), the lender wants to be pretty darn sure that you will pay it back as promised. To determine that, it will want to see how much money you make, and so, on your application, you’ll list that figure. The lender will also check your credit reports and scores.

As for your earnings, you won’t necessarily be penalized for the source, but you might be because of the amount. If the amount is tiny, it wouldn’t make much sense for a bank to offer you a credit card that allows you to borrow a lot, would it? While your expenses might be low because of your subsidized rent and food, it is still highly unlikely that you have extra cash to work with.

Regarding your credit report and scores, how you’ve managed your debts in the past is also important. Consumer credit reports list all that information. Additionally, credit scores are derived from what’s on those credit reports. Good scores indicate less risk to lenders. So if you don’t have a credit record in place, the bank has nothing to go on.

In short, if you have a credit report that lists lots of positive data, excellent credit scores and an income that can support what you might spend, you will probably qualify for an unsecured credit card. If not, you won’t.

But don’t give up! You may be able to get a secured card — a card that is collateralized with cash. By putting money down, the lender offers a credit line equal to or a bit above your deposit. A smart place to start looking for one of these accounts is the financial institution where you have a history of doing business. If you have a checking and or savings account with a bank or credit union, ask if they offer secured cards.

Now, you may also qualify for an unsecured credit card with someone else’s help. If you know someone who has wonderful credit, he or she may co-sign for you and you would become equal partners in the account. However, because the two of you would be liable for the payment, all activity — including problems — will show up on both credit reports, and both of you can be sued for delinquent debts. So the secured card is a better option by far.

Lastly, when you do get a credit card, always pay your balances in full and on time. Be especially vigilant oversees, keeping close watch on your activity online. It’s amazing how purchases can add up while traveling.

Got a question for Erica? Send her an email.