How To Make The Most Of Your Credit Card
When youre starting out and building up your credit, your goal should be to match or exceed the 690 credit score target required to establish good credit. Here are a few tips to help you get there:
- Develop healthy payment habits. When trying to build your credit, you should aim to pay off your balance on time and in full every month to avoid interest, or at least pay more than the minimum. Plus, you should plan to use less than 30% of your available credit limit at all times.
- Keep your account open and active. Responsible credit card use over time is a component that the credit bureaus take into consideration. Demonstrating a responsible credit history can go a long way towards boosting your score over time.
- Be meticulous. You can utilize credit monitoring tools offered by your issuer, bank or third-party sources to keep track of your score and check for any mistakes. If you do encounter any mistakes, you can dispute them and keep your credit score on track.
- Evaluate your options. When initially searching for a credit card, youll want to consider if there is a path to a better credit card with the same issuer. After establishing a good credit history you may be able to upgrade to a better card with a higher credit limit and rewards rate while maintaining your line of credit.
Join A Credit Union For A Fresh Start Loan
The starter loan works similar to the secured credit card but because they are issued by a credit union, any fees tend to be less expensive. The consumer deposits money with the credit union and uses and pays back the money to establish credit.
So it’s possible to live without a credit card, Spencer said. And for hotel and rental car reservations, consumers can use the debit card attached to their savings or checking account, he said.
“You have all these myths out there floating around like, ‘I have to get a credit card as fast as I can because that starts my financial life’,” Spencer said. “I haven’t had a credit card for about seven years now, and haven’t found a thing that I can’t do with a debit card.”
More Useful Tips If You Have No Credit History
Once you’re approved for a credit card, use it responsibly so that you can qualify for better credit cards and loans in the future. Maintain a low balance and try to pay it in full every month to build a good credit history. Also, keep these other pointers in mind:
- Don’t give up if you don’t have any previous credit history. Talk to lenders and ask whether they have other ways to qualify you for a credit card. Some lenders will consider payment history from rental or utility records, and you won’t know until you ask.
- Avoid submitting a lot of credit card applications. If youre turned down for a major credit card, even if its a student credit card, dont keep applying. Instead, look for a store credit card or a secured credit card. Choose these credit cards ahead of time so that youre not desperately searching for a credit card that will approve you.
- Watch out for any credit card that guarantees approval without first checking your credit score. Theres probably a catch in the form of high fees or a high-interest rate or both.
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Limit Your Number Of Credit Applications Or Credit Checks
Its normal and expected that you’ll apply for credit from time to time. When lenders and others ask a credit bureau for your credit report, its recorded as an inquiry. Inquiries are also known as credit checks.
If there are too many credit checks in your credit report, lenders may think that youre:
- urgently seeking credit
- trying to live beyond your means
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Secured credit cards require the consumer to submit a security deposit in the amount of the desired credit limit. If the consumer defaults on what has been charged to the card, the deposit protects the issuer. Secured cards are good for people who have no credit or those who are working to repair bad credit. One secured card with much to offer is the Discover it® Secured Credit Card.
The Discover it® Secured Credit Card card offers cash back, which is unusual for a secured card. Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, 1% unlimited cash back on all other purchases – automatically. The annual fee is $0, and the deposit can range from $200 to $2,500. The APR is 22.99% Variable APR.
While most secured cards will return your deposit if you pay the card off in full and close the account, the Discover it® Secured Credit Card has an even better opportunity. After 7 months with the card, Discover begins monthly reviews of your account to see if you qualify to get your deposit back and graduate to an unsecured card.
Note that youre not guaranteed the upgrade, and Discover considers your behavior across all credit products, even from other issuers.
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Repay Mortgage Or Car Loans
Since both mortgages and car loans report to , making timely payments on either of these loan types will help you build your credit score without a credit card.
The difficult part is getting approved for either of these without an established credit history. With a steady income and good down payment, you may be able to get approved. If you can’t qualify for a loan on your own, consider getting someone with good credit to co-sign for you to boost your odds of approval.
Know the risks of co-signing before you proceed. The person who signs the loan with you will be held liable for the loan payments if you can’t make the payments on your own. Late payments will affect the co-signer’s credit just as much as they will affect yours, derailing your efforts to build your credit.
If You Have Very Good Credit In Your Home Country And Want An American Express Card In The Us
If youre interested in an American Express credit cardwhether its a no annual fee rewards card like the Blue Cash Everyday or the uber-luxe Platinum card you may be able to get approved when you have a healthy credit profile in your home country, even if you have no credit history in the US.
In October 2019, American Express announced it had partnered with cross-border credit-reporting startup to offer a program in which you can choose to let Nova Credit access your credit record from your home country .
The service then translates that international data into a US-equivalent score, which American Express uses to determine your eligibility for one of its cards.
To participate in the program, apply for any American Express consumer card online . Youll see a box you can check if you dont have an SSN. Checking that box takes you to a separate page, where you can give Nova Credit permission to access and analyze your data.
Opting into the service initiates a soft inquiry on the home-country credit reports for immigrants from all participating nations . Since youre applying for a US credit card, it also results in a hard inquiry on your US credit reports But be warned: Even if youre not approved for the card, youre still hit with a hard inquiry.
The entire process typically takes just seconds after you enter your information. In most cases, you can see whether youve been approved for an American Express card within minutes.
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Factors To Look For In Your First Credit Card
If youve made up your mind to get your first credit card in 2022, youve come to the right place. However, with hundreds of credit cards in the market, it can be overwhelming to decide which card you should get first. We can help with that. For example, youll need to look at which type of card you want whether there are fees and what rewards are offered. Well walk you through the different types of cards and what you should pay attention to.
People with no credit may not be able to qualify for a top-tier product right away, but, after they demonstrate responsible use, they can look into an upgrade.
Will A Secured Card Help Me Build Credit
If your bank turned down your application for a traditional credit card but offered you a secured card instead, that can be a very good place to start. Ask your bank whether they report their secured accounts to the credit reporting companies, as not all do. If the lender does report these accounts, and you make all your payments on time, that positive payment history could immediately help you establish credit.
Even if your bank doesn’t report secured accounts, if you demonstrate that you can manage the account responsibly by keeping your balance low and making all your payments on time, they may eventually be willing to convert the account into a traditional credit card.
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Which Types Of Credit Cards Offer Easy Credit Card Approval
- Low income credit cards. Your annual income plays an important role in the credit card you can apply for. Low-income credit cards, as their name implies, have low minimum income requirements, which usually sit around $12,000 a year. Keep in mind, even these card providers will delve into your credit history.
- Low rate cards. If you plan to carry a balance on your credit card, getting a card with a low-interest rate could help keep costs down when compared to other options. A typical low interest rate card would not offer extras like concierge access and complimentary insurances, but it would offer all basic features you can expect from a credit card like fraud protection.
- Low credit limit credit cards. Cards with stricter eligibility criteria usually offer more features and higher credit limits, but if you have a low income, lower credit limits that normally start around $500 generally apply.
- Joint account cards. If you dont earn enough to apply for a credit card, you can consider applying for one as a joint applicant, by combining your income with your partners income. If your partner has an existing credit card, you can even think about getting an additional card linked to their account.
- Low annual fee cards. Annual fees on credit cards vary, but cards with low fees are likely to have fewer extra features and usually have lower income requirements and more lenient eligibility criteria.
Final Thoughts On Building Credit Without A Card
Understanding how to build your credit without a card is essential if you can’t get an affordable credit card or don’t want to rely on plastic for payments. Making on-time payments on loans and other monthly expenses is a viable method for strengthening your credit and increasing borrowing opportunities in the future.
But keep in mind: Permanently opting out of credit cards could hold your credit score back since 10% of your credit score is based on the different types of accounts with which you have experience. Showing lenders that you can be responsible with both credit cards and loans is best for your credit score in the long run.
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Which Credit Card Is Best For No Credit History
Theres a pretty big difference between having no credit and having bad credit and the credit card you choose should reflect the difference.
Bad credit means you have a history of financial mistakes. Having no credit means youre credit invisible. Essentially, you have no recorded history of borrowing money from which the credit reporting bureaus can generate a reliable score.
Bad credit often means youll have to settle for cards that offer higher rates and other fees since the card issuer takes a risk with every card it approves for someone with a negative history. You shouldnt incur penalties for not having a credit history.
The Surge Mastercard® is a great entry-level card because it only charges an annual fee when you activate your card. Most cards in this category charge both a program fee and an annual fee at the time of activation. Both can quickly eat away at your available balance.
The Surge Mastercard® also offers higher potential credit limits, with a maximum $1,000 limit for new cardholders.
How To Apply For A Credit Card With Easy Approval
Once youve compared different credit card options, you can apply for a credit card online. Before you apply, be sure you meet the eligibility requirements and have the relevant documents on hand.
Although it can vary between different credit card providers, to applyeven for some of the easiest credit cards to get approved for in Canada, you would usually have to meet the following eligibility criteria:
- Be 18 years old or the age of majority in your province or territory
- Be a Canadian citizen or a permanent resident with a valid Canadian address
- Have a regular source of income
- Have a good credit history, which is usually a score of 650 or higher
Necessary documents and information
You also need to provide different types of information, which could include the following:
- Your full name, date of birth and details from your Canadian drivers license or government-issued ID
- Your Canadian address, email address and phone number
- Your employers name, phone number and address
- Details of your income and expenses including a recent paycheque or bank statement
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How To Apply For Your First Credit Card
Applying for your first credit card doesn’t have to be scary. If you already have a checking or savings account in good standing, consider applying for a credit card at your current bank.
For many credit cards, you can apply online or visit a bank branch to work directly with a representative. Make sure to ask about all of their credit card options.
Can You Have A Credit Score Without A Credit Card
Yes, you can have a credit score even if you never have a credit card. As long as you have an account that reports to the credit bureaus.
This could be a personal loan or car loan, or even your rent payments if your landlord uses a service that reports them to a credit bureau. Keep in mind that it can take up to 6 months to get a credit score if you dont already have one and youve opened an account that reports for the first time.
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Best Cards For Those With No Credit History
Having bad credit and no credit are two very different things. But whether youre looking to build or rebuild your credit, youll likely have to start with an entry-level credit card.
The cards listed below offer low credit limits but report your payment history to the credit reporting bureaus to help you improve your credit rating over time.
The Milestone® Mastercard® offers an easy prequalifying application that allows you to check your approval odds without submitting an official application and receiving a hard inquiry on your credit report. Milestone® also reports your payment and spending activity to the credit reporting bureaus to help build your credit score.
Sign Up For Experian Boost
For those with low credit scores or thin credit files, the credit bureau Experian offers a free online tool called Experian Boost. With Experian Boost, payments that wouldnt normally count toward your credit score may be able to be counted.
To use Experian Boost, you must register and link a bank account. The tool will scan your account for qualifying bill payments and, if you give permission, add the payments to your credit file.
The average user of Experian Boost received a 13-point credit score increase, according to the credit bureau. This is based on the FICO Score 8 model using Experian credit report data.
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Whether Its A Student Loan Or Financing For Furniture You Can Have A Credit Score With No Credit Card
Ive always steered clear of credit cards after watching my parents struggle all my life. Up until now, thats worked for me. But now I want to buy a house and Im worried the lack of credit will mean I cant get approved. Since Ive never had a credit card, do I even have a credit score to assess? If not, what can I do?
Chantelle R. in Baton Rouge, LA