- Posted by towpe1
- On October 30, 2018
- 1 Comments
How to Get a Credit Card With No Credit
New to credit? No established credit history? It can often seem impossible to find a lender willing to approve you for your first credit card. Lenders want to see how well you’ve managed credit obligations in the past before they’ll extend new credit, but how do you get credit if you don’t have credit? It’s a frustrating dilemma; however, the situation isn’t as dire as you may think.
How Do I Get a Credit Card With No Credit?
There are credit cards for no credit. Secured credit cards, in fact, are specifically designed to help people build or rebuild their credit scores. Additionally, you could always see if a friend or family member will add you as an authorized user on their credit card account.
Before you assume you don’t have a credit score, be sure to check yours. If any of your accounts (student loans included) have reported information to the major credit reporting agencies in the last six months, you should have a score.
What Is a Secured Credit Card?
A secured credit card works much like a traditional credit card, except you open the account by making a cash deposit to “secure” the card. The credit limit on a secured card is equal to the cash deposit, which acts as collateral and minimizes the bank’s risk in the event that you don’t pay the bill. For example, if you deposit $1,500 for a secured card, your credit limit on the card would be equal to $1,500. Most secured cards can be opened with as little as $200 or as much as $2,000.
If you’re opening a secured credit card for the purpose of establishing credit be aware that secured cards often carry high interest rates and annual fees, so they’re not ideal for long-term usage. The goal is to establish and build good credit, after which you’ll want to convert to a traditional credit card with lower interest rates and better terms.
Also, not all secured credit card issuers report to all three major credit reporting agencies. Since you’re establishing credit for the first time, you want to make sure the card is reported to the three main credit bureaus — Equifax, Experian, and TransUnion — so you’re getting credit for managing the account responsibly. Remember, if it’s not in your credit reports, the account won’t factor into your credit scores and it won’t help you establish and build great credit.