The world of credit can be tricky to fully understand. We often ask ourselves will we be accepted if we apply for a credit card or loan, but it’s normally second nature now as we’ve done it for years.
Can the same rules apply for an emancipated minor? If you’re emancipated, can you now grab yourself a credit card? We’re going to explore this.
What Does It Mean To Be An Emancipated Minor?
Emancipation refers to the process whereby a person under the majority age applies for independence from their parents or guardian. In some States, this might be 21, whereas in some, the age is 18.
There might be a variety of reasons that a minor might apply for emancipation, but in any case, if the emancipation process is successful – they are granted their independence which means they are now given certain rights they did not previously have without parental consent.
Some States might ask for evidence that the minor has the ability to look after and provide for themselves before they accept the request, such as evidence of work or financial support/savings.
In some situations, the minor might be granted emancipation but with limitations such as purchasing alcohol – to which, they must wait until the legal age of 21.
There are certain events in a person’s life that mean they get automatic emancipation, such as marriage or joining the military. However, both of these examples might have age requirements in the first place.
What Rights Are Granted With Emancipation?
Generally, a minor will be granted the right to buy and sell property, look after their own finances and control their own medical care. However, the minor might still be subject to State and Federal laws with restrictions on things such as:
- Drivers license
- Jury duty
- Medical marijuana
So, What About Credit Cards?
Being a minor means you are not old enough to enter into a legal binding agreement or contract as you haven’t reached the age to consent to the terms of the contract. However, with emancipation – you can legally enter into contracts.
As normal, the minor will also be subject to the same terms and conditions of a contract as an adult would.
Even though legally an emancipated minor can get a credit card, that doesn’t mean the likelihood is good.
Problems For Credit With Emancipation
An emancipated minor might encounter a plethora of issues when trying to apply for a credit card. Even with their new freedom, they might still have the problems of:
Many credit card suppliers have strict rules on minimum age. Capital One for example will only supply a credit card to someone whose minimum age is 18, without exception. A credit card company doesn’t have to supply a credit card to anybody at all.
They must only comply with the laws, therefore a minor would not be able to argue a case for a credit card.
Even if an emancipated minor manages to find a lender that will provide credit cards for people younger than 18, they may only do so if certain financial measures are met.
This strict financial examination might make it incredibly difficult to be accepted for credit, as the chances are – an emancipated minor will not be cash rich or have a high income.
As most lenders will scrutinize your income and expenditure, a small income at a young age might not be enough to be accepted.
No Credit History
Without a credit history, it makes it more difficult for a lender to assess your creditworthiness. A lender will weigh up the risks for lending to you, and one of the best ways is to check how you managed credit before – which will be shown on your credit report.
Thing is, if you’ve never had credit before and have recently become emancipated, the chances of being accepted are very low.
However, these problems don’t necessarily mean you won’t get accepted at all for a credit card. Besides the fact that in some rare circumstances, the emancipated minor will be rich (such as child actors), there are a couple of things the minor can do in order to build a credit history and perhaps be accepted for their own credit card.
What Can An Emancipated Minor Do If They’re Refused Credit?
Sometimes, we think if we’re refused credit, that that’s the end of it and we won’t be granted any form of credit, but this isn’t true. You can do things like:
Become An Authorized User
In some situations, an emancipated minor might still have a good relationship with their parents or guardians that they’ve gained independence from. In this instance, the minor can request their previous guardian to place them down as an authorized user on their credit card.
It’s crucial to know though, that any transactions will be held accountable to the credit card primary user, so if you do not have a prior arrangement about the bills, you may fracture the relationship and you’ll suffer a hit on your credit score.
Think carefully before doing this!
Contracts That Build Credit
Emancipation provides the right to enter into agreements under your own accord. If some credit lenders are hesitant to lend to you, you might find it is helpful to provide some evidence to the credit bureau.
One way to do this without having a credit agreement with someone, is to enter into an agreement with something like a cell phone or your rent.
This way, you can provide the financial information (positive information of monthly rental payments) to the credit bureau, building your credit score and eventually getting you on the credit card ladder.
Stick With Debit
Some banks will still be hesitant to provide a debit account to emancipated minors, but you have more chance of being accepted for a debit account. In this instance, you can manage your own money without credit and work your way up to a credit card, potentially with the same institution.
The Key Point
An emancipated minor legally can have a credit card, but it is extremely unlikely that a lender will take the risk on them without a credit history, being under 18 and financially unstable.