Having no credit or a limited credit history can be a pain when it comes to simple things like turning on utilities in your name. It can also make it nearly impossible for you to qualify for a mortgage. Credit cards are an excellent way to build your credit history. Credit cards for limited or no credit are a great solution for those who want to make day to day purchases and raise their credit score. Many of these cards are secured or prepaid credit cards. Find answers to your questions about the best ways to build your credit score using credit cards.
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If you're a student, some credit card companies have credit cards specifically for you. If you're under the age of 21, you may need a co-signer to verify that you can make the payments. If you aren't a student, you can try to qualify for a regular credit card, called an unsecured card, or you can apply for a secured credit card.
A secured card is specifically for people who have no credit history or who are trying to improve their credit score. You secure your credit line with a cash deposit that is held in an account. You then use the credit card like any other, including paying your balance each month.
Plenty of banks and credit card companies offer secured credit cards, so be sure to check with your bank as you shop around. Many of the cards featured on CardRatings.com's page specifically for people with limited or no credit are secured credit cards. Keep in mind that some secured credit cards may allow you to transition to an unsecured account after a length of time.
CitiGroups Citi Secured Card won CardRating.com's Best Credit Card of 2009 award in the "No Credit" category because it allows consumers to earn interested on their security deposit in a CD account and, after 18 months, consumers with good account histories can upgrade to an unsecured credit card account.
One-third of your credit score comes from timely payments. Make your payments on time every month. Also, be sure any credit card you're considering regularly reports to all three credit reporting agencies.
Yes, there are cards with rewards programs, though mostly for unsecured cards and for college students in particular. If you're opting to apply for a secured credit card, plan a little ahead and look at the reward programs available for unsecured credit cards through the same company.