Those with No Credit - NerdWallet
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Those with No Credit

If you have no credit, you’re slightly better off than someone with bad credit, but only slightly. Banks aren’t likely to want to assume the risk of lending to you, so you’re generally limited to secured credit cards. You should focus on building up enough of a payment history to move on to unsecured credit cards.

Secured credit cards: A secured credit card allows you to borrow money you don’t have, but you need to post collateral upfront, usually equal to your credit limit. You may also need to pay annual fees. However, your interest rate should be lower: below 10% isn’t unheard of. On-time payments are reported to credit rating agencies, so using the card responsibly will establish a good credit score.

Young adult credit cards: A number of small community banks and credit unions, as well as a few bigger banks, offer a young adult card to help youth, though not necessarily students, build up their credit scores. If you’re under 21, you’ll need a co-signer automatically. If you’re over 21, you’ll need a co-signer unless you have a source of income. You can piggyback on your co-signer’s good credit score to build up your own.

Immigrants: Capital One has a special card for immigrants: the Capital One for Newcomers. It’s meant for people who had a good credit history in their previous country but started with a blank slate in America. The card earns 1% rewards and waives its foreign transaction fee, a nice perk when traveling abroad.

How to build up your credit score: The best way to establish a good credit score is build a solid payment history with a credit card, generally a secured card. In moving your score up from no credit to good or even excellent credit, the most important thing to do is to pay off your bills each month. Incurring a little bit of debt every once in a while will move you from excellent to really excellent credit, but don’t worry about that for now. Please see our tips on how to raise your credit score.

While there are only a few ways to build up your credit score, there are any number of ways to ding it. Missed payments, bankruptcy and excessive debt are the most obvious, but you can also be marked down for missed rent or utilities payments. Unfortunately, on-time bills don’t raise your score, and can only lower it.

Debit cards, even prepaid debit cards, do not affect your credit score at all. If you get a prepaid debit card, you’ll end up paying a lot of fees you don’t need to, without helping yourself move upward.

  • Tabrez Alam

    it is really a good hand pick for me:)

  • Shawn Clark

    @nerdwallet:disqus , I have a Citi Thank You AMEX, What cards are better for rewards? The Captial One Venture? Southwest RR card? Any others? Thanks

  • RamDC88

    About the mileage value rewards of the Venture Card, is it of the same value mileage for mileage like let’s say compared to American Express Delta Skymiles rewards?

  • legolas666

    The Costco American Express Card seems to be the best Cash Back Card I’ve found! No annual fee, 3% back gas, 2% restaurants, 1% everything else…I easily get back at least $350 each year (you can choose to use it at Costco, or go to Costco and they will give you cash directly if you don’t want to use your earned credit there). I would hope anyone these days using Credit Cards pays them off monthly and carries little to no balance, if possible!)

  • Chad Molenda

    Unless you spend a lot of time overseas making many foreign transactions, the “Nerd’s Choice” credit card, The Capital One Venture Card, is probably the worst choice.

    Ignoring the fee, you get 2 points per 1 dollar spent. After that, it’s 100 points for each 1 dollar you want to spend on travel. This means you effectively get 2% cash back on everything and it’s intended to be spent on travel.

    Math: For every 1 dollar spent, 0.02 dollars are rewarded (2% cash back)
    1 dollar spent * (2 points earned / dollar spent) * (1 dollar rewarded / 100 points earned)
    = 2 points earned * (1 dollar rewarded / 100 points earned)
    = .02 dollar rewarded

    This is only applicable for the first year, where the fee is waived. You get even less, by a variable percentage depending on how much you spend per month, once you add the -59 dollars to the equation.

    The Blue Cash Preferred one may not be too bad, as you’ll have recouped the annual fee after spending $1250.00 in groceries, but I’ve already got an AMX.

    Given that I charge almost everything, I think I’d be best off with the Chase Freedom, should I have to pick from these cards.

  • RT

    this whole article is false. im a cardholder. get my paycheck 2 business days before my co workers. 10.00 monthly fee is 5.95 with direct deposit on your account…customer service is a bunch of non english speakers.but thats about my only complaint

  • Cutter Blaine

    USE CODE 7624176635 .THIS ONE REALLY WORKS. IVE USED IT SEVERAL TIMES. EXPIRES ON JULY 2014 SO HURRY . YOUR WELCOME 😉 Free $20 when you use this refferal code and add $40 to your acct. THIS IS FOR NETSPEND

  • CrapCards


    If you apply for a card that states on the advertisement “12 billing cycles interest free”, you may not qualify for that 12 month term. Instead, the company will unknowingly to you stick you with 6, and you are none the wiser unless you scour over your card member agreement.

    In my case, there was an application for USBank credit card, and on that ad it stated “12 billing cycles interest free” and nothing concerning the fact that you may not get that entire 12 months. They do state however that your APR will vary, depending on credit worthiness. Now wouldn’t you assume, if there was some grey area on the duration of such introductory rate based on creditworthiness, they would fill you in, as they do with the variable APR. This is not the case.

    So my point is this, you may think you’re getting that full year of interest free charges on purchases, and you actually get six.


    How much is Capital One actually paying you???

  • Jane Imperial

    Bank America has changed the rewards on their card. It’s not 1%, 2% for groceries and 3% for gas. Now its 1% across rthe board.