You may need to work together
If you're struggling with how to find a credit card for a student with no income and you've struck out on both a student credit card and a secured card, you may need to get someone else involved. Specifically, you may need to find a cosigner or become an authorized user on someone else's account.
Cosigners can act as collateral for students with no income
Smaller banks or credit unions that issue credit cards will sometimes allow you to apply for a credit card with a qualified cosigner. However, the top 10 credit card companies have stopped allowing them.
A cosigner is someone who puts their own credit and income up as collateral for someone else. So, the student would be the primary user on the card, while the cosigner merely agrees to pay the debts should the student default.
Becoming a cosigner is a big decision, as the cosigner's credit can be damaged if payments are late -- or stop coming altogether. The cosigner is also ultimately responsible for repaying the balance, and they'll likely be who the collection agency comes after if things go sideways.
Authorized users don't need any income
When you sign up for a credit card with a cosigner, both you and the cosigner take on financial and credit risk. If the primary cardholder messes up, everyone's credit score suffers. With an authorized user situation, however, the risk is a lot more (but not entirely) one-sided.
Authorized users are people who have the ability to charge purchases to a credit card account but do not have legal liability to pay the balance. Basically, someone else is the primary cardholder on the account. The authorized user can get a card in their name tied to the account and can make purchases as if it were their own.
Conveniently, when someone becomes an authorized user on an account, that account tends to be reported to the credit bureaus for both the primary account holder and the authorized user. This could mean an instant credit history (and credit score) for a student who previously had none.
While this may sound like an easy way to build credit, it can definitely backfire if the authorized user isn't particularly responsible. Giving a student a credit card they can use freely -- but have no responsibility to pay for -- could end up being very costly for the main account holder.
Conversely, the problems of the main account holder can also become the problem of the authorized user. Missed payments or high balances will show up on the authorized user's reports, too. For this reason, it's imperative to add an authorized user to an account that is used responsibly and has a good credit history.
Not all card companies report authorized users to the credit bureaus, but most major issuers will do so. To see what's being reported, simply check your credit report. You can get a free credit report from each main consumer credit bureau -- Equifax, Experian, and TransUnion -- once a year. (It's a good idea to check your credit reports at least once a year anyway.)
