Wednesday, February 1, 2023

How To Apply For First Credit Card With No History

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What Is A Credit Score

Best First Credit Card – Starter / Beginner Cards for No Credit History

A credit score is a number that predicts how likely you are to repay borrowed money.

Its a three-digit numerical representation of the information in your credit report, managed by the three major credit bureaus: Equifax, Experian, and TransUnion.

This score ranges from 300 to 850 under the FICO scoring system, with lenders looking at these numbers when deciding whether or not to approve potential loans.

The most critical factor in determining your credit score is payment history, accounting for about 35% of the total. The other most significant factors are amounts owed and length of credit history .

Balances on different types of loans make up less than 15%, while new account activity only contributes about ten percent.

Building good credit doesnt happen overnight, as it measures your ability to manage loans and lines of credit wisely and responsibly over time.

How Your Parents Can Help You Get A Credit Card

Most students dont have much of a credit history. But building credit is a helpful step towards qualifying for that first card. Luckily, many credit card issuers give parents the option to add their child as an authorized user.

Having your parents add you as an authorized user on their credit card is a great opportunity to help your credit score when used responsibly* so eventually, you can apply for your own credit card. Its also a smart way to learn how to manage your spending and avoid credit card debt, which is when you carry a balance on the card month to month rather than paying it off in full. When you do that, the downside is you have to pay interest. While that may not seem like a big deal, those charges can add up over time. With that in mind, theres another caveat: You need to make sure you use your parents card wisely. Overspending and getting into credit card debt wont do you, or your parents, any good when it comes to building and maintaining a solid credit history. That said, becoming an authorized user on your parents card is a great way to learn about credit limits and using credit cards responsibly. Sure, you may not think you need a great credit score when youre in your late teens and early 20s. But the sooner you start building your credit history and learning good habits by using credit cards responsibly, the easier time youll have getting better credit offers for loans, mortgages, and car leases when youre older.

Are Credit Report And Credit Score The Same Thing

Your credit report, or credit history, is different from your credit score. However, both are essential to your financial standing.

A credit report is a detailed account that includes a person’s credit accounts and debts, past and present. A credit score provides a way for lenders to measure your creditworthiness at a given point in time. It’s based on five criteria, with each one accounting for a certain percentage of the score:

  • Payment History – 35 percent
  • * See the online application for details about terms and conditions for these offers. Every reasonable effort has been made to maintain accurate information. However all credit card information is presented without warranty. After you click on the offer you desire you will be directed to the credit card issuer’s web site where you can review the terms and conditions for your selected offer.

    Editorial Disclosure: Opinions expressed here are the authors alone, and have not been reviewed or approved by any advertiser. The information, including card rates and fees, is accurate as of the publish date. All products or services are presented without warranty. Check the banks website for the most current information.

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    Another Important Note: You Do Not Need A Social Security Number To Start Your Us Credit History

    Experian and TransUnion will track and attempt to match your name, birth date, and address to your credit history. However, specified personal information like an SSN and ITIN make it easier for credit bureaus to report information accurately. Traditionally, you had to use stepping stones to build credit in the U.S. before you could qualify for an unsecured credit cards with no credit. You could do this by starting with a secured card, taking out a credit builder loan or becoming an on someone elseâs credit card.

    Now, you have a new option thanks to a partnership between American Express and Nova Credit.

    If you donât have a credit history in the U.S., but you established your credit in Australia, Canada, India, Mexico or the UK, you can now apply for an American Express® Card using that credit history. You donât even need a Social Security number .

    You can learn more about the application process in our guide. And here are some of the most popular Amex cards you can choose from:

    What To Consider Before Choosing A Credit Card

    Best No Credit History Credit Cards

    As a newcomer to the U.S. without any credit history, you may have limited options when opening a credit card for no credit. The nine cards above may be good options, but choosing the right one will depend on the card details and how you plan on using your credit card.

    Here are a few features you should compare and consider as you look over the various credit card offers.

    The fees: Credit cards can have a variety of fees, including an annual fee that you have to pay to keep the account open. Additionally, look for usage-based fees, such as foreign transaction fees or cash advance fees.

    A grace period: Most credit cards have a grace period thatâs around 21 to 25 days long. During this period, which goes from the end of your purchase period to your billâs due date, interest wonât accrue on your credit card balance that comes from purchases. It also wonât accrue during your statement period. However, balances from cash advances and balance transfers generally donât have a grace period and start accruing interest right away. If you pay your bill in full by the due date, you keep your grace period and never pay interest on your purchases. However, if you donât pay your bill in full, you lose your grade period and your purchases start to accrue interest right away. Additionally, some cards that are targeted at people with no or poor credit donât have a grace period.

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    How Credit Card Companies Determine Credit Limit

    As a new cardholder, youll have a credit limit, which is the maximum amount of money a bank or lender will let you borrow. But the amounts vary. Most card issuers check your credit reports to calculate your credit limit. Credit card companies also pay close attention to your repayment record, the length of your credit history, and the number of accounts on your credit report. Also, the higher your annual income, the larger your credit limit is likely to be.

    If you have more than one credit card, issuers will often check your other credit limits to determine how much credit theyre willing to extend to you. In fact, most credit card companies check your account histories with all your lenders to monitor your financial responsibility and payment history.

    So what can you expect the credit limit to be on a new card? The minimum credit line on a Discover it student account is $500. Credit card companies often consider information you provide on your application, details on your credit report, and other information related to your creditworthiness. To apply for a , your lender will want to know if there have been any changes to your annual income and monthly mortgage or rent payments. If you pay your balances on time every month, credit card companies are generally more likely to increase your credit limit. Usually, all you have to do is call and ask for an increase.

    Self Credit Builder Account + Secured Visa Credit Card: Best Low Apr Card For People With No Credit

    Why we picked it: This hybrid financial product, which starts off as a credit-builder loan and could transition into a secured credit card , touts a low APR for the no credit category.

    Pros: You can avoid having to put down the upfront security deposit required of most traditional secured credit cards, as youll be making three monthly installments payments instead.

    Cons: Youll pay a one-time account fee of $9 to $15, which varies by the product. Plus, youll have to wait at least three months to have access to your secured credit card.

    Who should apply? Thanks to its relatively low APR, this non-traditional credit-building loan/secured card could be a good fit for someone who may carry a balance.

    Additional info on the Self Credit Builder Account + Secured Visa® Credit Card

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    Citi Secured Mastercard: Best Credit

    Why we picked it: Your security deposit is refundable if you upgrade to an unsecured card within the first 18 months.

    Pros: Theres no annual fee and you can choose your credit limit based on what you can afford to provide as a security deposit. You can put down as little as $200 to start.

    Cons: This card offers no rewards. If thats important to you, there are secured cards that do offer rewards programs.

    Who should apply? For someone rebuilding their credit, this card charges no annual fee and offers the opportunity to graduate to an unsecured card after 18 months of responsible use.

    Read our Citi® Secured Mastercard® review

    Secured Mastercard From Capital One: Best Credit Line Growth For People With No Credit

    Best Credit Cards For No Credit History

    Why we picked it: With the Secured Mastercard from Capital One, you have the opportunity to raise your credit limit after your first 6 months of on-time payments and responsible use, which is a solid feature for a credit-builder card.

    Pros: As a Mastercard, this product is widely accepted worldwide, making it extraordinarily convenient when traveling.

    Cons: Theres no sign-up bonus, no ongoing rewards, and the regular APR is a super high 26.99% , making it a poor option for carrying a balance.

    Who should apply? If you dont plan on carrying a balance month-to-month, this card makes for a strong starter card with the possibility of a higher credit line down the road.

    Read our Secured Mastercard® from Capital One review

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    Minimum Cibil Score Required To Avail A Regular Credit Card

    As mentioned earlier, CIBIL scores of individuals are generally in the range of 300-900. To have a good CIBIL score, it is always better to have a number that is close of 900. Ideally, a good CIBIL score for a individual falls in the range of 700 and above. However, to pinpoint precisely as to what is the minimum CIBIL score required to avail a regular credit card is a tough ask as most banks and financial institutions follow a similar pattern. Usually, banks accept a CIBIL score in the range of 700-750 and above to issue a credit card to an individual. However, there is no hard and fast rule to it as banks and financial institutions offer certain credit cards to individuals with low credit score as well.

    Best For International Applicants

    Who’s this for? The Deserve Digital First Card is good for anyone with zero or limited credit history who doesn’t have the means to put down a security deposit.

    There’s no annual fee and no foreign transaction fees. Plus if you’re approved for the card, you receive instant access and can add it to Apple Pay.

    Cardholders also receive up to 1.5% cash back, based on the amount of money you spend each billing period. Here are the levels:

    • 1% cash back: Purchases up to $500 earn 1% back.
    • 1.25% cash back: After you spend $500 in a billing cycle, you’ll earn 1.25% back on purchases until you hit $1,000 in spending.
    • 1.50% cash back: After you spend $1,000 in a billing cycle, you’ll earn 1.50% back on remaining purchases that billing period.

    You can redeem cash back as a statement credit to offset your bill.

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    Our Featured Low Apr Card: Green Dot Primor Mastercard Classic Secured Credit Card

    Green Dot Bank is best known in the U.S. for offering prepaid cards. With prepaid cards, you load money into your account and can then use the card to spend itâsimilar to a checking account and debit card.

    However, prepaid cards donât get reported to the credit bureaus and donât help you build credit. Green Dot bankâsâs secured credit cards are real credit cards and Green Dot Bank reports your account to all three major credit bureaus.

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    What the card offers: The Green Dot primor® Mastercard® Classic Secured Credit Card doesnât have a minimum credit history or score requirement, although youâll need a bank account to apply.

    Many secured cards have a high annual percentage rate , which impacts how much interest accrues when you donât pay your credit card bill in full. The Green Dot primor® Mastercard® Classic Secured Credit Cardâs rate is relatively low compared to other secured cards, which could make it a good option if you might occasionally carry a balance. However, you should still try to plan ahead and pay your balance in full whenever possible.

    Potential cons to beware of: The Green Dot primor® Mastercard® Classic Secured Credit Card has a $39 annual fee and 3% foreign transaction fee. The security deposit starts at $200, although you can send up to $5,000 if you want a higher credit limit.

    How To Get A Credit Card If You Dont Have A Credit History

    No credit check credit cards

    At Experian, one of our priorities is consumer credit and finance education. This post may contain links and references to one or more of our partners, but we provide an objective view to help you make the best decisions. For more information, see our .

    In this article:

    Opening a credit card is one of the quickest ways to start building a credit history. But qualifying for a new card can be challenging if you don’t have an established record of managing credit accounts or loans.

    You might not have a credit history if you’ve never had a credit card or loan before, or if you’ve borrowed from lenders who did not report the account activity to the three credit bureaus . You might also lack a credit history if you had an account many years ago that has since been removed from your credit report, and you haven’t applied for any credit since.

    But even without a credit history, you may be able to qualify for certain types of credit cards that will help you establish a record of responsible money management and on-time paymentswhich will work toward building a good credit score.

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    Applying For A Student Card As Your First Credit Card

    Student credit cards are designed for students and can be a good option for young people with little or no credit history. These cards can help students establish a credit history and build credit scores while learning how to responsibly manage their finances.

    Student cards are generally backed by major credit card issuers, and your payment and account information is typically reported to one or more of the three major credit bureaus.

    Apply For A Retail Store Credit Card

    According to the Consumer Financial Protection Bureau , a retail store card is another option you might consider if a secured card or a student card isnât the right option for you.

    Just like a traditional credit card, a retail store card could show as a line of credit on your credit report if itâs reported to the credit bureaus. And using the card wiselyâlike making consistent, on-time payments on the cardâcould help build credit history. That may improve your chances of being approved for a traditional card in the future.

    Keep in mind that you might only be able to use retail store cards in the store or group of stores that issued them. You can learn more by reading the cardâs terms and conditions.

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    Whats My Credit Score

    Each credit reference agency has different criteria for scoring, so your own score will vary from one agency to another.

    • Equifax scores from 0 to 700
    • Experian scores from 0 to 999
    • TransUnion scores from Rating 1 to Rating 5

    When you apply for credit, the lender carries out a credit check with one of the three main credit reference agencies to find out more about your credit history. Sometimes they might even check with all three agencies. Next, the lender uses this information and the details from your application to give you a credit score based upon their own lending criteria.

    This score is used to decide whether to lend to you, as well as which product you might be offered if youre accepted. If your credit score is a low one, you might only be offered a high-interest loan or a high-interest credit card. Try not to worry, because different lenders have different ways of scoring, so rejection from one lender doesnt always mean youll be rejected by another.

    If your application is accepted, its important that you know how to use a credit card responsibly. The most important thing to remember is that you must make repayments on time and keep within your agreed limit.

    One last thing: dont forget to check your credit score before you apply, because even a limited credit history could put you in the bad credit category. Some credit card providers wont lend to people with poor credit, and a rejected application can damage your chance of getting further credit.

    Secured Vs Unsecured Credit Cards

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    Unsecured credit cards dont require you to provide collateral such as funds in your checking or savings account in order to be approved. However, you generally need to have a good credit history to qualify for one of these cards. If you are new to credit or dont qualify for an unsecured credit card, a secured card may be an alternative that requires an upfront deposit to be used as collateral toward your account. Keep in mind, with a secured credit card if you dont pay the terms as agreed, you may be at risk of losing your collateral.

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