Getting a credit card without a credit history can present many obstacles if you can’t meet the requirements imposed by the traditional FICO scoring model. Secured credit cards are sometimes an option, but they require an upfront deposit and might not work for everyone.
Alternative credit card issuers are trying to bridge this gap by using their own nontraditional underwriting standards to assess creditworthiness based on factors such as income, employment and bank account information.
The upshot: Even if you have limited credit or no credit at all, you have options, and some may be easier to get than you think.
Consider these alternative credit cards.
Nerd tip: Using a credit card regularly and responsibly offers a quick and effective way to build credit. By paying on time, keeping a low balance and maintaining an open account, you can establish a good track record.
Top alternative credit cards
Deserve® EDU Mastercard for Students
Qualify with student status and no credit
The Deserve® EDU Mastercard for Students is an excellent option for students who can’t qualify for a credit card because they lack a U.S. credit history. International students may also qualify without a Social Security number. Deserve uses its own underwriting model to determine creditworthiness for the card, evaluating things like financial documents, contact information, income and U.S. bank account balances to determine your ability to pay.
The Deserve® EDU Mastercard for Students earns an unlimited 1% cash back on all purchases, a statement credit for a 12-month Amazon Prime Student subscription (up to $59) and a $30 statement credit every time you refer a friend who qualifies for the card. The card also reports to all three major U.S. credit bureaus: TransUnion, Equifax and Experian. These companies record the information used to calculate your credit scores. The annual fee is $0.
As a Mastercard, it also makes an ideal travel companion, with broad international acceptance. There are no foreign transaction fees.
Petal® 2 "Cash Back, No Fees" Visa® Credit Card
Qualify with no credit
Petal's issuing bank might not rely solely on credit scores to determine who qualifies for its credit card. It can use a “machine-learning” underwriting model that considers such things as applicants' income, expenses, savings and debts. The Petal® 2 "Cash Back, No Fees" Visa® Credit Card reports your payments to the three major credit bureaus, TransUnion, Equifax and Experian, allowing you to build a credit history.
The card does not require a security deposit and even offers a cash-back rewards program. The annual fee is $0, and you won't be charged late fees, over-limit fees or foreign transaction fees. (The card does not allow cash advances or balance transfers.)
You must be a U.S. resident with a valid Social Security number or an individual taxpayer identification number to qualify.
Qualify with no credit and no Social Security number
The $0*-annual-fee Jasper Mastercard® targets working professionals who are new to credit. It doesn’t require a credit score or credit history, or even a Social Security number upfront in some cases (although you must report one within 60 days of activating the card).
Applicants without a Social Security number must provide passport and visa information, along with proof of income in the U.S. The company evaluates applicants using factors such as debt-to-income ratio. The Jasper Mastercard® requires no security deposit and earns rewards of at least 1% cash back on all eligible purchases. It offers a credit limit of up to $5,000, depending on eligibility. (Note: As of this writing, the Jasper Mastercard® reports only to Equifax and TransUnion, meaning activity on your account wouldn’t show up in credit scores or reports pulled from the other credit bureau, Experian.)
AvantCard Credit Card
Qualify with limited or fair credit
The AvantCard Credit Card requires that you have some credit history established, at least limited or fair credit. It weighs that factor along with your income and debt to determine eligibility. (Note that this product isn't available in Colorado, Iowa, Vermont, West Virginia or Wisconsin.)
For a $39 annual fee, you’ll get a card that reports to all three credit bureaus: TransUnion, Equifax and Experian. The AvantCard doesn't earn rewards, but it will save you money on foreign transaction fees, and you don't have to pay a security deposit. As a Mastercard, it will also be widely accepted by merchants abroad. Credit limits can go as high as $1,000, which is on the lower end compared with other alternative credit cards. But the company may review your account periodically to determine your eligibility for a higher credit limit.
It's not a bad choice for those with thin credit files, but if you have at least fair credit, better options are available.
American Express credit cards could also be options for immigrants and expats in the United States with no Social Security number and no credit history here.
Typically, any credit history you may have built in your native country will not follow you to the U.S. But in late 2019, AmEx teamed up with international credit-reporting startup Nova Credit to launch a feature that can translate eligible international credit reports from qualifying countries into U.S.-equivalent credit reports.
The feature is currently limited to credit reports from qualifying credit bureaus in Australia, Canada, India, Mexico and the United Kingdom.
Other alternative credit card options may also be on the horizon. It's still a relatively new market with plenty of room for other companies. The X1 Card, for example, currently has a waitlist and is expected to launch in winter 2020. The X1 Card vows to place more value on your income when evaluating creditworthiness. Once it starts accepting applications, it will only conduct a soft pull on credit reports instead of a hard inquiry.