Credit Card for People with No Credit History
If you want to apply for a credit card with no credit history, you must be a lucky man who has earned enough money or a student. Anyway, credit cards are a necessary instrument of everyday life, and it is a mature decision to start the application process for a credit card for a person with no credit.
A credit card is not about buying a yellow Ferrari right now. Some benefits are extremely required to minimize possible risks and costs. Here are two primary examples to illustrate this:
- Financial resources in case of an emergency. Whatever serious situation occurs with you or your property, you may take necessary actions without delay. Time is more critical when we are talking about essential things.
- Better offers. A credit card, together with excellent credit history, provides lower interest rates and higher car insurance rates. It helps you to pay off debt faster than under standard conditions. Besides, when renting something, it will be much easier to get approval.
Confidence is what you get when you have a credit card. Remember that possession of credit requires a responsible approach that influences the quality of your life. Start to build an excellent credit history from the very beginning.
Before we go to the question “How to apply for a credit card with no credit,” we should explain to you some basics about the credit system. Having a better understanding will help you to have a good credit history in the future.
There are 3 CRAs (Credit Reporting Agencies) collecting information regarding your credit reports: TransUnion, Experian, and Equifax. All of them have accurate reports about some of your accounts. You may receive a free report from each of them upon request once every year. Do it regularly when you have credit to prevent any errors or fraud.
These agencies calculate the so-called credit score, which is used by financial organizations to assess your credit solvency. For this reason, people with no credit history may face some problems. Your credit score consists of several factors in different proportions.
- 35 % – Payment records
- 30 % – Debt usage
- 15 % – Duration of credit accounts
- 10 % – Credit accounts types
- 10 % – Number of complex requests
The higher your score is the less risk that you represent to banks. The best score is 750+. You will receive nothing if your rating is less than 600.
Now, you know what the whole system is about. Let us see how to build credit when you have none.
There are several variants of credit cards to build credit with no credit history.
The cardholder – usually a close relative or parent – may authorize you to use his or her credit card. This kind of credit card you can get with no credit history. The advantage is that the card owner is obligated to make the payments anyway.
However, it does not mean that you may skip paying off the bills. The main goal is to obtain a high credit score for extended capabilities. For this reason, your activity, even on someone’s credit card, should be reported to credit agencies. Make it as good as possible.
Easy credit cards to get with no credit are branded ones. Receive them from gas stations or retailers. Be careful not to ruin your credit history just because the expenses are not that big. You should be disciplined and pay off the bill at the end of each month. Only in this case, you may ask the store to report your good credit history to the CRAs mentioned above.
That is the next step to build creditworthiness. First, you need to have a small deposit at a bank. The bank will be able to give you a secure card with a low limit. In case you do not pay the bill, the bank can take money from your deposit.
Because of this, the card is called “secured”. Of course, it is secured by the bank. Again, be disciplined, do not spend a lot of money, pay your bills, build your proper credit history, and then apply for an unsecured card.
As we mentioned in the very beginning, students usually think about how to build credit when they have none. You may find a variety of credit cards designed specifically for students. If you are sure about your ability to pay the bill, take this one. Of course, for “beginners” the conditions are not that attractive. However, it would be best if you use it until the moment you have a high enough score to get a better one.
So, now you see that there is nothing complicated in obtaining a credit card for a person with no credit. The more difficult thing is creating a good credit history. Follow our advice to prevent credit score reduction:
- Be disciplined. Every month you should make on-time payments. On-time payments are 35% of your success! You already know that from above. The worst thing after a low credit score is collection agencies. After 90 days of no payments, your case is reported to them.
- 100% is not good. It means when you have credit, do not use the entire amount available. Your maximum is 30%. Resist the temptation to spend more. When you take more, it reduces your score.
- Start with one. At the beginning of building your credit history, do not use all possibilities to get a credit card at once. You need just one to get accustomed to new financial habits.
However, life may be unpredictable even when you follow the rules. It often happens that a person has problems with solving their unsecured debt obligations. In this case, companies like ours help customers to resolve issues. Unsolvable issues do not exist.
Thousands of people have started the successful rebuilding of their credit after some financial difficulties. All you need is to remember how to build creditworthiness and that in case of problems, we have specialists who can help you.