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If you’ve got no credit, obtaining credit cards is often quite difficult. You’ll be hard pressed to find someone willing to lend you an unsecured credit card, so your options may be limited to secured cards. Thankfully, this isn’t the end of the world, and if you work hard to establish your credit history, you can quickly be on your way to bigger and better cards. Plus, if you’re a student, many issuers will cut you a break because they know you haven’t had much time to develop a history. Here’s a rundown of how to find credit cards for limited or no credit, and to avoid the fees that often come with them. What to look for, and what options you have, are mostly contingent on why you don’t have a strong FICO score. Students get a lot of slack, recent immigrants get a dedicated secured card just for them, and those with bad credit, well, they have more limited options.
I’ve got bad credit and I’m looking to improve my score.
If you want to bring your FICO score back up, your best chance is to use a secured credit card. These require you to post collateral upfront, usually equal to your credit limit, and otherwise function as a regular credit card. Once you close the account, you’ll get your deposit back. Unfortunately, secured cards often come with annual fees or high interest rates, but a couple offer better rates than most.
Orchard Bank: Orchard Bank cards offer some of the best rates for secured cards. The $35 annual fee is waived the first year, giving you a chance to move up the ladder without paying fees. The interest rate is a low 7.9%. By comparison, other credit cards for bad credit charge as much as 22%. Best of all, Orchard Bank approves pretty much everyone for a secured credit card, regardless of FICO score or bankruptcy status, so it’s pretty much a lock. The low fees and easy qualifications make the Orchard Bank secured cards among the best options if you’re rebuilding your credit.
Household Bank: Household Bank, like Orchard Bank, is a subsidiary of HSBC. And like the other HSBC credit cards, the Household Bank Rewards MasterCards has an annual fee: $0 or $39*. But it has one significant advantage over the other cards: you can earn 2% rewards on all your purchases, even with the secured credit card. That’s a pretty amazing rewards rate, even for cards for good credit. The Household Bank Rewards MasterCards has the same requirements for its secured card as does Orchard: they don’t care about bankruptcy status or credit score.
I’m new to this country.
If you just moved to the US, Capital One has a dedicated secured credit card for you. The Capital One® Cash Rewards for Newcomers is designed for recent immigrants who left their credit histories behind when they crossed the border. Unlike most secured credit cards, its annual fee is $0, and it gives rewards on your purchases. You earn 2% cash back on travel and 1% back on all other purchases, and it has no foreign transaction fee, ideal for visits home. The card is pretty much only available to recent immigrants, but if you’re newly come to the states, it’s a great option.
I’m a student.
If you’re a student with no credit, first of all, congratulations on taking the first step to building your FICO score. This number can determine your interest rate on loans and credit cards, whether you qualify for a mortgage, and whether you can rent an apartment. If you’re looking to build credit as a student, you’ll probably need someone to co-sign the credit card with you, unless you have a substantial income. This isn’t necessarily a bad thing – if your parent co-signs the loan, you’ll get a better interest rate and higher credit limit than you otherwise would. Plus, even though it’s a joint account, you can establish your own payment history. Check out our selection of the best student credit cards that cater to the college population and are forgiving of short histories.