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Which credit card is for someone who has no credit history?

By , CardRatings contributor
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Question: Which credit card is for someone who has no credit history?

Answer: With no credit history, a secured credit card is your best bet. You can search for a secured credit card online or to go to a bank or credit union within your community, and see if they offer a secured credit program. Most banks usually offer such programs.

A secured credit card usually will require a savings account with a balance of  $200 or more and will then issue a card limited to this amount. The benefit of this type of card is that not only do you have a credit card like any other, but more importantly, a secured card develops credit history. You should confirm that the card will be reported to all three major credit reporting agencies.  One thing to ask for in getting such a card is if they will offer you an unsecured card after a designated period of on-time payments.

Secured credit card programs routinely report to one or all three credit bureaus, not for only negative comments such as late payments. But because on-time payment history accounts for over 33 percent of your credit score, on-time payment of any secured debt is the fastest way to build a good credit history. Of course, you never want to be late with any payment as this is the same as pouring a bucket of ice water on your credit building efforts.

When seeking a good secured credit card, find out if your savings will draw interest and how much interest you have to pay on card balances. If there is a promotional offer, ignore it and base your decision on the regular interest rate. Check for anything else you might be seeking in a card such as cash back or rewards. Usually a secured card won't have these features, but occasionally rewards do exist.

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