Much has been written about how to get a credit card if you have poor credit or little credit, but what if you have absolutely no credit history?
Never fear. You too can get a credit card!
Credit card companies know that everyone has to start somewhere, and many issuers are willing to extend a credit card to those who haven’t taken on debt in the past. You simply need to know where to look and keep your expectations in check as you apply.
How to get a credit card with no credit
There are many reasons someone might not have a credit history.
You may be a young adult just starting out in life, or maybe you are emerging from a divorce and your ex-spouse kept all the finances in their name. Or perhaps you are that rare breed who has always paid cash, but now you’re ready to begin earning credit card rewards that will let you travel cheaply or get cash back for your everyday purchases.
Whatever the reason, here are the ways you can apply for a credit card with no credit history and be approved.
Student credit cards
If you’re a student, your best option will likely be a student credit card. Credit card issuers know that those who apply for student cards may have limited financial resources and little experience with debt. As a result, they may be more likely to approve someone with no credit history.
Be aware that if you are younger than age 21, you may not be able to get a card without a co-signer unless you can show proof of independent income.
Student credit cards typically have lower credit limits than other cards, but you can still earn rewards. In fact, the best credit cards for students may offer up to 5% cash back on select spending categories.
Credit builder cards
If you’re not a student, don’t worry. In that case, you can apply for a credit builder card. These are a relatively new type of card that is made for those who want to build a credit history.
Some of these cards don’t pull your credit report but use alternative ways to check your financial responsibility. For instance, some cards link directly to your bank account to check your credit worthiness.
Other credit builder cards require cardholders to open an associated savings account and then limit card usage to the balance in that account. The CardName is one such example. Cardholders must first open a Credit Builder Savings account, and then they receive a secured credit card linked to that account. After making three on-time payments and saving $100, cardholders may be upgraded to a regular credit card.
Secured credit cards
There are also traditional secured credit cards that are available to almost everyone, regardless of whether you have a credit history. These cards require a security deposit and then issue a card with a credit limit equal to the security deposit.
Some secured cards will automatically review your payment history after six months and issue a higher credit limit if you’ve been on time with your payments and have exhibited healthy credit behavior.
Applying for credit card with no credit
When applying for a credit card with no credit history, be realistic about your options. You aren’t likely to be approved for a top-tier card right away. Instead, focus on the cards designed for those with little to no credit.
For many credit cards, the application process is the same regardless of whether you have a credit history. In most cases, that means providing your Social Security number for a credit check along with details about your annual income. If you aren’t approved, the card issuer may offer you an alternate card that fits your credit profile.
The exception is credit builder accounts. Some of these don’t check credit reports, and they may have an alternative method of evaluating an applicant’s creditworthiness, such as asking for access to bank accounts.
Others don’t evaluate your financial history at all and simply ask that you open a savings account to link to your card. Then, you can charge purchases using funds from your savings account.
While credit builder accounts are structured differently than traditional credit cards, they still report to the major credit bureaus, which will result in your building a credit score.
Tips for building credit with no credit history
Once you receive your first card, you can begin to create a credit history that will allow you to later to be approved for cards with higher credit limits and more lucrative rewards. To help that process along, follow these tips:
- Apply for a card that will report your payments to all three of the major credit reporting companies: Experian, Equifax and TransUnion.
- Make on-time payments each month.
- Avoid carrying a balance that is more than 30% of your credit limit. This will improve your credit utilization ratio and, in turn, should boost your credit score.
Of course, ideally, you’ll want to pay off your balance each month to avoid paying interest charges. Staying out of debt is the best way to avoid accruing interest, which can cause your monthly payments to balloon.
If you don’t have a credit history, the good news is that you can still get a credit card. Now that you know your options, explore the many credit cards on CardRatings.com to find your perfect match.