How to Get an Unsecured Credit Card With No Credit History
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Even if you have no credit, it doesn’t mean you’re completely out of the running for an unsecured credit card.
Yes, your options are limited. That’s because with no credit, the bank that issues the card doesn’t have much information to base its decision on.
Still, there are potential paths, including starter cards, alternative cards and becoming an authorized user on someone else’s account (provided you use those cards responsibily by making on-time payments and keeping your credit utilization low). Some of these cards even offer cash-back rewards.
Once your credit history is more established, you’ll have better odds of qualifying for a greater variety of credit cards. Here are some card types to consider if you have no credit history.
NERDWALLET'S GUIDE TO YOUR FIRST CREDIT CARD |
Secured credit cards
Sure, your eventual goal is an unsecured card, but a secured credit card could be a starting point. You must make a cash deposit, which in most cases will become your credit limit. Once your application is approved and you make your deposit, you can use the secured card to make purchases just like you would an unsecured one. Using a secured card responsibly may make it possible to graduate to unsecured credit cards in the future.
Many secured credit cards require a bank account for the purposes of funding the security deposit, but there are exceptions that will accept money orders and other forms of payment. Look for cards that report to all three major credit bureaus.
Alternative credit cards
Alternative credit cards use nontraditional underwriting standards, meaning that instead of relying solely on your credit scores, they can look at other information like your income, employment and bank account information.
Some alternative cards allow you to apply without a Social Security number, making them an option for immigrants and international students who want to establish a credit history in the U.S.
Student credit cards
It can be more difficult to qualify for a student credit card than a secured credit card. They require you to have independent income or a co-signer if you’re younger than 21 or income to which you have “reasonable access” (like a spouse or partner’s income) if you’re 21 or older. However, student cards are unsecured, meaning you don’t have to make a security deposit when you first open the card.
Joining an existing credit card account as an authorized user
You can also build your credit history by becoming an authorized user on someone else’s card account. You’ll be able to use the card to make purchases, but ultimately the primary account holder is responsible for paying the credit card bill.
This kind of arrangement calls for trust and communication. You’ll want to pick a primary account holder with a history of paying their bills on time and using their card carefully, so your credit history can benefit from their positive actions. At the same time, the primary cardholder will need to set a budget with you so your spending doesn’t exceed their budget.
How to build your credit history
Managing your new card responsibly will have a major impact on your credit history going forward. Here are a few important tips for building healthy credit:
Always pay your bill on time.
Strive to pay off your balance in full each month to avoid sinking into debt.
Don’t max out your card or keep the balance high. Ideally, you’ll want to keep your balance below 30% of your limit. Once you cross that threshold, there’s a chance of negatively impacting your credit.
Check your credit report and credit scores before getting your new card and periodically after you’ve established credit.
Think hard before canceling older cards. Part of your credit score is based on the length of your credit history. So an open account in favorable standing does more for your credit than closing it out.
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