Will Being Unemployed Stop You From Getting a Credit Card?
by Maurie Backman | Published on Sept. 21, 2021
Here's what to know about applying for a credit card if you don't have a job.
There are several factors credit card issuers look at when deciding whether to approve you as a new applicant. Your credit score, for example, plays a huge role in determining your eligibility for a new card. To a card issuer, too low a score says you may not be the most trustworthy borrower.
But what if you're out of a job? Does that mean you can't qualify for a credit card?
You'd think that would be the case. When you use a credit card, you charge expenses and pay them off at the end of your billing cycle or over time. And if you don't have a paycheck coming in, how are you supposed to make those payments?
The good news is that being out of work doesn't automatically disqualify you from getting a credit card. Here's what to know.
It's all about income
While credit card issuers do look at income when determining whether to approve applicants, that income doesn't have to come from a job per se. If you're not working but you have a decent amount of money from investments in a brokerage account, own a rental property, or have income from another source, you may qualify for a credit card.
Similarly, retirees often qualify for new credit cards despite not having jobs. If you're retired and collect Social Security, or receive Social Security alongside distributions from a retirement savings plan, all of that counts as income. So not working won't necessarily hurt you on a credit card application.
That said, if you don't have a job and you don't have other income sources to point to, you may be denied a credit card. After all, credit card companies want reassurance that you'll pay your bills.
Alternatives if you're between jobs
If you're out of work temporarily and need a new credit card immediately, you may still have options. You can try applying jointly with a family member who has an income. Some credit card companies allow you to apply with a cosigner -- someone who agrees to make your payments if you can't. Obviously this is a big thing to ask of someone, but if you're in a temporary jam, someone who trusts you may be willing to help you out.
Another option is to become an authorized user on a family member's credit card. Your sibling, for example, may let you use their credit card if you agree to cover all of the charges and pledge to stick to a spending limit.
You don't absolutely have to have a job to qualify for a credit card. But being unemployed can make qualifying more difficult if you don't have other income. If you're out of work for the time being, it could pay to hold off on applying for a new card until you have a steady paycheck once again. Waiting could also put you in a better position to qualify for a really good card with a great rewards program or other perks you'll enjoy.
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