Getting a credit card with no credit history is tricky business. When a company is evaluating someone in consideration for giving them a card, one of the things they do is look at credit history.
Having no history makes it difficult for them to make a decision. There are some options for people who are in this situation however. Secured credit cards operate just like a regular card except you have to pay a security deposit to the company. Student credit cards are another type of card for beginners. However, it is important for someone to look at the fine print on these deals to make sure they are not getting into a bad contract.
Applying with No Credit
Building credit history with no credit can be difficult. However, it is not a good idea to continuously apply for different cards. Continuing to apply will hurt the current credit score. Opening a secured credit card account is a great way to establish a credit history. Once good credit behavior has been established over enough time this account can be transferred over to a non-secured account.
The chosen secured card should be one that will report to all 3 credit bureaus. Making all monthly payments on time is critical when trying to establish or re-establish good creditworthiness. Utilization habits is another critical aspect of building credit. Utilization should remain under 10% of your available spending limit. Choose a secured card with no annual fee if possible. It does not make sense to pay a fee on money that you are paying up front.
Credit Card Options
There are some types of credit cards that are favorable to people who have no credit history. The Capital One Quicksilver card or Platinum card is the best cashback card. It offers up to 1.5% cash back on purchases. The Barclay card is the best rewards card. It has double rewards on gas, groceries, utilities and no annual fee. Students can apply for the “It” card from Discover. This card offers 5% cash back on rotating quarterly categories. Discover also has the Chrome card which offers 2% cash back on gas and dining.
Store credit cards are historically loyal to people with low credit and no credit. Be sure that the card has Visa, Mastercard or an Amex logo on it. This is because of some stores issue cards that are only accepted in-store. Choose a card that fits your spending needs such as Walmart, Gap or Macy’s. Secured cards should be the last option. They are more expensive, have lower limits and higher fees than regular credit cards. Some good options for a secured card are Bank of America secured cards and Capital One secured cards.
There are training tools that explain how to apply for new credit after bankruptcy. The Credit One Platinum Visa is an unsecured credit card that is offered to someone after filing bankruptcy. The annual fee is based on creditworthiness and there’s even a 1% cash back offer. The Milestone Gold card gives a pre-qualification application option. This does not impact the credit score. One of the top options is the Capital One Secured MasterCard. It comes with no annual fee, no foreign transaction fee, and no balance transfer fee.
Other Tips and Tricks for Reestablishing Credit
It is important to know exactly what your credit history is. Free sites like Credit Karma, Credit Sesame and Quizzle are available for personal research on an individual’s credit score. When applying for a card search for the best available offer. It is common for issuers to have different offers depending on the landing page that you click on. If you are interested in an online offer, take a screenshot. This will help to remember the terms and conditions of the original offer.
Importance of Income
State your entire income. Do not under-state this number. Report income from every source. Try to apply for multiple cards at once. This is a process known as an App-O-Rama or AOR. It is better to apply for two or more cards on the same day and preferably close to the same time. Issuers will not see the credit inquiries from other issuers if all applications are sent in at the same time. Make sure this process is done with different individual organizations and not the same company. Wait at least 90 days between each set of credit card applications.
Call the reconsideration line if not approved. If not approved, ask simple questions about the nature of the denial and if the company can provide more information.