No credit? No problem. There are ways to get a credit card with no credit, and using these cards to establish a credit history can help you down the road when you look for a reasonable rate on a mortgage or auto loan.
Check your score
Make sure you, in fact, have no credit by checking your credit score. There are several options for retrieving your score, but make sure you’re not getting lassoed into a recurring charge.
You may find you do have a credit score if your parents cosigned on a card for you. As long as the payments were made on time, this likely boosted what could have been a no-credit situation.
Consider a cosigner
While there are credit cards for no credit history out there, you may get a better interest rate and more options by finding someone with a good credit history to cosign on your first card.
Parents are the most obvious choice here, but not the only option. If you have a responsible close friend or other family member, cosigning will allow you to piggyback off their credit and income information, widening your options.
Consider a secured credit card
Secured credit cards are a popular choice both for people with bad credit and no credit history. They differ from other, unsecured credit cards in that they require a security deposit. Issuers can use that deposit if you fail to pay your bill on time. But remember, on-time payment history is crucial in building good credit.
Words of advice:
If you have no credit history, this credit card will likely be your first. Keep these tips in mind when evaluating your choices:
- Always read the fine print. You don’t want to sign up for a card only to find out you can only use it at certain stores or the interest rate after an initial introductory period is far more than you’re willing to pay.
- Track your credit score. As you open your first time credit card and begin to make regular, on-time payments, your credit score will change.
- Pay off your balance each month. As long as you’re figuring your charges into your monthly budget, paying off the balance every month shouldn’t be difficult. With no credit history, a missed payment or a carried balance can quickly hurt your credit score.
Your first credit card can have a long-term impact on your credit — we’re talking years. Though you may have no credit now, that will quickly change when you open a credit card account. Keeping your credit in good standing can save you the years of hard work it takes to correct poor credit management down the line.
Cash and credit photo via Shutterstock.