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You may have no credit, but that doesn’t mean you’re completely out of the running for an unsecured credit card. While good credit makes finding a credit card much easier, there are credit cards for people with no credit history.
A bank takes a certain risk with each credit card it issues. Your credit score and credit history are used in determining whether or not you are a good risk. With no credit, the bank doesn’t have much information to base their decision upon, so your options are limited.
Credit cards for no credit history
Secured credit cards are often offered as the most logical solution for people with bad or no credit. These cards require you to put a deposit down as collateral against the line of credit. If you fail to pay your monthly bill, the bank can use the deposit.
But there are some unsecured credit cards for people with no credit or bad credit. These cards will likely have higher fees and interest rates than other unsecured cards (those offered to people with good credit), but they won’t require an upfront deposit like a secured credit card. Read here for additional information on unsecured cards that are easy to qualify for.
Building your credit
Because you have no credit, managing your new card responsibly will have a major impact on your credit worthiness in the future. In other words, the habits you develop with this card now will determine your credit history. So use it wisely. Here are a few important guidelines for building healthy credit:
Always pay your bill on time.
Strive to pay off your balance in full each month to avoid sinking further and further 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 score before getting your new card and periodically after you’ve established credit.
When it’s time to move on to a better credit card with lower rates and fees, 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.