How to get a credit card with no credit history
We’ve all got to start somewhere. At one point in our lives, we had absolutely no credit history. The credit slate was clean.
Indeed, having no credit history is more common than you may think. Nearly one in five Americans have no credit history or credit score, according to a report by the Consumer Financial Protection Bureau.
But if you have no credit, how can you get a credit card? It’s a great question, and one that has a few answers.
Here’s how to get a credit card if you have no credit history:
1. Apply for a secured credit card
Perhaps the best way to get a credit card if you have no credit history is to apply for what’s known as a secured credit card.
With a secured credit card, you make a cash deposit and the amount of the deposit typically becomes your credit limit.
For instance, the issuer of a secured credit card will provide a $300 credit limit when you deposit $300 into an account; sometimes you’ll earn interest on the money on this account, and sometimes you won’t.
The “secured” part refers to the deposit, which serves as collateral.
If you’re responsible with a secured credit card, the deposit normally is refunded to you. But if you repeatedly fail to make payments on the card, for instance, the card issuer might close your account and keep your deposit.
This differs from a traditional, or unsecured, credit card in that you aren’t required to make a deposit to get an unsecured card.
If you do decide to get a secured credit card, make sure the card issuer alerts the three credit-reporting bureaus — Equifax, Experian and TransUnion — about your payment activity. That way, you’ll begin building a credit history and can eventually qualify for an unsecured card.
2. Apply for a card designed for those with no credit
Some credit card issuers have unsecured cards designed just for people who have no credit history. These include the Capital One Platinum card, the Credit One Bank® Platinum Visa®, the Surge Mastercard, the Total Visa® Card and the First Access Visa card.
If you’re applying for a secured or unsecured card, pay close attention to the interest rates and fees. Look for a card with the lowest interest rate possible and no annual fee.
Check out our list of credit cards open to those with no credit history.
3. Try your bank or credit union
Daniel Talley, professor of economics at Dakota State University, suggests trying the bank or credit union where you have a checking or savings account.
If you consistently keep a certain amount of money in that account, the bank or credit union might approve you for an unsecured card, Talley says.
4. Get a credit card from a retail store or gas station
Some experts even recommend getting an unsecured card from a retail store or a gas station. These cards tend to be easier to obtain that general-purpose credit cards.
However, be careful with these specialty cards: The interest rates often are higher than the rates for cards that you can use anywhere, not just at a retail store or gas station. If you do get a card from a retail store or a gas station, be sure to pay off the balance in full every month to avoid hefty interest charges.
Be careful with your credit
No matter whether you get a secured or unsecured card, treat your credit carefully.
For example, always pay at least the minimum amount due and always pay on time. Paying less than the minimum amount due or paying after the due date will hurt your ability to build a credit history.
“Managing credit is important, but if you find yourself in a situation where your credit card debt is getting difficult to pay off every month, don’t wait until you have missed some payments to seek help,” Talley says.
The first place you should seek help is from the credit card issuer. Perhaps you can work out lower monthly payments or other ways to deal with your credit problem.
If your credit card debt has really gotten out of control, then it’s probably time to visit with a credit counselor from a nonprofit credit-counseling agency. You can work with the counselor to create a plan to dig out of your credit card debt.
Do you actually have a credit history?
By the way, you might actually have a credit history and not realize it. Under these scenarios outlined by Consolidated Credit, a nonprofit debt relief service, you might have a credit history and, therefore, a credit score:
- You took out student loans, even federal student loans that don’t require a credit check.
- You financed a car with an auto loan.
- You got a personal loan from a bank.
- You received a court judgment that requires payments, such as alimony or child support.
- You’ve had any kind of account, such as a cellphone contract, sent to a debt collector.
To see whether you have a credit history, check your credit reports before you fill out a credit card application. Once a year, you’re entitled to get one free credit report from each of the three credit-reporting bureaus.