If you are currently not working, you may be curious whether you need a job to qualify for a credit card.
Fortunately, being unemployed doesn’t automatically disqualify you from getting approved for a credit card. While most credit card companies require you to prove that you have a steady income, that is not the only thing they care about. There are a variety of other factors that lenders account for when deciding whether to approve or deny you a line of credit.
Even without a job, there are ways you can get a credit card.
- While you do not need a job to open a credit card account, many lenders prefer borrowers who have regular income coming in.
- If you do not have income, there are other ways to gain access to a credit card.
- Once you get a credit card, use it responsibly to build credit and set yourself up for financial success, including making on-time credit card payments, spending within your means, and monitoring your credit card statements for fraud.
Can You Get a Credit Card Without a Job?
Yes, you do not need a job to get a credit card.
However, having proof of income is typically a requirement for most lenders. That can come from a job, but it can also come from other sources such as government benefits, alimony, or investments. In other words, while you may not need a job to get approved for a credit card, not having any income could dampen your odds significantly.
Credit card companies want to know that you are a trustworthy borrower and have the means to repay your debts. While employment status and income are not perfect predictors for vetting prospective cardholders, they are strong indicators of your creditworthiness. The Credit CARD Act of 2009 also requires credit card issuers to factor in your ability to repay debt as part of the application process.
If you are 21 and older, any income that you will have “reasonable expectation of access” to can be counted, including:
- Spousal income: If your spouse or partner has a stable income, you can include that as part of the “household income” you have access to.
- Social Security payments: If you are retired, your Social Security benefits could be a key income source for your creditors to be aware of.
- Retirement account distributions: If you have retirement accounts you tap into, that represents another source of consistent income.
- Scholarships and grants: If you are a student with academic scholarships and grants, you can cite them as income.
- Financial aid: You can include forgivable loans, disability payments, unemployment benefits, and other government aid as income. Note that you should not include student loans since that is technically debt, not income.
- Inheritance and trust fund: If you get inheritance and trust fund distributions, they are also valid income.
- Investments and rental income: If you are a landlord or have investments that generate passive income, include those in your application.
- Child support and alimony: If you get child support and alimony, those are considered consistent sources of income.
If you are under 21, most of these options will not apply to you as you are limited to personal income, allowances, scholarships, and grants. During college, I cited scholarships as part of my income to qualify for the now-defunct Uber credit card and get a higher credit line.
In some cases, card issuers may ask you about your income source and show a preference for some sources over others.
Breaking Down Credit Card Applications
Aside from having enough income, when a lender reviews your application, they will look at your credit score, debt-to-income ratio (your current debt payments as a percentage of your income), credit history, and other financial information. In addition to these requirements, you may also need to provide certain documents to prove your identity and income, including a driver’s license, passport, or Social Security number.
The Role of Credit Scores in Credit Card Approval
Your credit score is a three-digit number ranging from 300 to 850, which reflects your riskiness as a borrower. If your score is too low, the issuer may reject your application due to concerns you may default on your debt. On the other hand, if your score is high enough, you may be approved even if you don’t have a job.
Your credit score calculations has five components:
- Payment History (35%): Lenders prefer borrowers who can pay their bills on time and in full every billing cycle. If you frequently pay late or miss payments, that can seriously hurt your credit score.
- Balance Owed (30%): Your credit utilization, or the percentage of your total credit limit across all your accounts, is another major factor in your credit score calculation. Experts recommend using 30% or less of your total credit, though I typically use 10-15% to be safe.
- Length of Credit History: The longer your credit history, the better. Similar to building a successful career, you want to have a strong history of debt repayment and good financial habits.
- Mix of Credit (10%): Having different types of credit, such as auto loans, student loans, and mortgages, demonstrates that you can responsibly handle debt. However, that doesn’t mean you should go out of your way to borrow money.
- New Credit (10%): Whenever you apply for a credit card, the credit card issuer will pull a hard inquiry on your credit, which dings your credit score by up to five points. It’s best practice to stagger your applications to avoid your credit taking a major hit.
Things to Consider Before Applying for Credit Without a Job
Before applying for a credit card while unemployed, there are a few key things to consider.
One of the most important considerations is your ability to pay off your balance at the end of each billing cycle. While most credit cards have minimum monthly payments that are just a fraction of your balance, the interest rates can quickly add up and exacerbate your financial situation.
If you are late 30 days or more on a payment, you will get fined, and your credit score will take a hit, not to mention the interest that will get tacked on. Late payments also remain on your credit reports for seven years, which can prevent you from getting approved for credit later on.
Most credit cards charge interest rates that range anywhere from 14% to upwards of 26%. If you can’t keep up with your debt repayment, you could end up paying way more than you bargained for.
If you need access to credit to cover essential expenses in the meantime, consider alternatives since credit card debt is expensive and not ideal if you are broke. For example, you may want to tap into an emergency fund, reach out to a loved one, or look into a personal loan (which comes with lower interest rates).
Understanding the Different Types of Credit Cards
When it comes to credit cards, there are several types to choose from, each with its benefits and drawbacks. Here are a few options to consider:
- 0% APR Credit Cards: If you are cash-strapped or have a lot of existing credit card debt, consider applying for a credit card with a 0% APR promotion period. Many cards offer 12-18 months periods where you can make purchases without accumulating interest. However, once the promotion period ends, your card will be back to the regular interest rates.
- Secured Credit Cards: If you have never had a credit card before or have poor credit, you can apply for a secured credit card. These cards usually require a security deposit that will serve as your credit limit. For example, if you deposit $500, your credit line will be $500.
- Rewards Credit Cards: Cashback credit cards reward you for spending money. Depending on the card, you can earn points and miles for different spending categories, such as travel, dining, groceries, etc. Usually, they will also come with generous welcome bonuses, which you can earn after spending a set amount of money in a given timeframe. Before applying, check if there is an annual fee since that can impact your finances.
- Student Credit Cards: There are many cards in the market designed specifically for college students, who typically tend to have less income. These cards come with low fees and reward programs that are easier to get approved for.
Ways to Get a Credit Card Without a Job
If you do not have a job, there are still ways to increase your chances of getting approved for a credit card by leveraging someone else’s credit.
1. Find a Co-Signer with Good Credit and a Steady Income
Depending on where you apply, some credit card companies allow you to add a co-signer to your credit card application. That enables you to get a credit card with someone else’s help.
Your co-signer could be a family member, friend, or someone you trust who is willing to vouch for you and agree to make your payments when you can’t. If you apply with a co-signer, the bank will consider the credit history and employment status of both you and your co-signer, increasing your odds of approval. But, remember…
Asking someone to be your co-signer is a huge deal.
If you fail to make a payment, that could jeopardize your credit score and your co-signer’s. Make sure to find someone you trust and set guardrails and expectations before applying. If something goes wrong, that can cause serious damage to your relationship and credit.
2. Become an Authorized User
Most credit cards allow cardholders to add an authorized user to their account. An authorized user will have access to the credit card and be able to use it as their own, along with the primary account holder. Since the account already exists, unemployment will not matter to the bank.
If you can’t qualify for a credit card on your own, ask a family member or friend to make you an authorized user on their account. If they agree, all they have to do is provide your information to the bank and ask to have you added. Once you are approved, you will get a credit card with your name on it that is linked back to their account.
Being an authorized user is slightly different from finding a co-signer as you are not responsible for repayment. Instead, the primary credit card holder is liable for payments.
Still, you should work out an agreement with your friend or family member to hash out the details of the arrangement, including your spending limit and repayment plan. It’s a big responsibility for both parties and could affect both of you and the primary cardholder’s credit scores if you fail to make a payment.
How to Increase Your Chances of Getting Approved for a Credit Card
While it will require a bit of effort, there are ways you can improve your credit even during financially trying times.
If you have existing credit cards, continue paying your bills on time. If that is difficult for you, you need to start budgeting and cutting down on expenses. You can also attempt to contact your lenders to see if they can work out a repayment plan with you.
Make it a habit to check your credit reports regularly with each of the three major credit bureaus – Experian, Equifax, and TransUnion. You can get free copies of your credit reports at AnnualCreditReport.com. As you review your reports, address any outstanding issues or errors on your credit reports to help your credit.
Tips for Using Your Credit Card Responsibly
Once you get approved for a credit card, using it responsibly will be essential to maintaining good credit and avoiding financial difficulties down the line.
If you frequently forget to pay your bills on time each month, set up automatic payments or reminders to ensure that you never miss a payment. After paying a bill half a day late and getting slapped with a $25 late fee, I learned my lesson and never missed a payment again.
Avoid using your credit cards to make purchases you can’t reasonably afford. We recommend only using your card for purchases you can comfortably pay off each month. When I was in college, I frequently spent way above my (non-existent) budget from shopping and going out too often. Since I didn’t have financial support from my family, this caused a lot of anxiety for me whenever it was time to pay my bills.
Never max out your credit cards (if you can help it). The higher your credit utilization, the more irresponsible you will appear to lenders, which affects your ability to qualify for loans in the future.
Monitor your credit card statements regularly to check for fraudulent or unauthorized charges. If you see one, report any issues to your credit card issuer as soon as possible. The last thing you want is to end up footing the bill for a transaction you never made. This step will help protect your financial security and prevent future problems.
The Bottom Line
Of course, it helps to have a job if you plan on applying for a credit card. But, while maintaining a steady income can improve your chances of getting approved, it is not a requirement to get a credit card. There are many factors that credit card issuers consider when deciding whether to approve an application.
If you do not have a job, you can also try other ways to get a credit card. For example, you can get a secured credit card, which is a great option for those with limited credit history or income. Alternatively, you can apply for a co-signed credit card or ask someone to add you as an authorized user to their card.
As you navigate unemployment, take steps to preserve your credit and set yourself up for financial success when you start your new endeavor.