Starting off, you need a credit card but have no credit history, and that’s okay. This article is your guide. You’ll learn about different types of starter credit cards for no credit and their benefits.
You’ll also get to know step-by-step how to apply, and tips to increase your chances of approval. By the end, you’ll be equipped with the knowledge to confidently get a credit card with no credit.
Relation between having credit and getting a credit card
Having credit means you have a credit history. This comes from borrowing money or using credit in the past. It includes loans, credit cards, and other credit activities.
Credit is like a financial report card. It shows how well you handle money. Lenders look at it when you want to borrow, including when applying for a credit card.
Credit bureaus collect this data, creating your credit report. Good credit can mean better card options and lower interest rates. No credit means you’re an unknown, and lenders may see you as a risk.
But, there are cards designed for this situation to help you start building credit. It’s a cycle: use credit wisely, build a good credit history, and get better credit opportunities.
Types of Credit Cards for No Credit
In the USA, several types of credit cards cater to individuals with no credit:
- Secured Credit Cards: You pay a security deposit that usually becomes your credit limit. Good for building credit.
- Student Credit Cards: Specifically for students. Often have perks and lower fees.
- Retail Credit Cards: Linked to specific stores or brands. Easier to get but usually have higher interest rates.
- Prepaid Credit Cards: You load money onto the card. Not a credit card in the traditional sense, but can be used like one.
- Credit Builder Cards: Designed to help build or rebuild credit. Might have lower limits and higher interest rates.
Pros and Cons of These Cards
Each has its own pros and cons, so it’s important to get a credit card with no credit that fits your needs and financial situation best.
Secured Credit Cards:
- Pros: Great for building credit; often easier to get approved; security deposit is refundable.
- Cons: Requires upfront security deposit; usually low credit limits; some have high fees.
Student Credit Cards:
- Pros: Designed for students with limited credit history; often have rewards or perks; helps build credit.
- Cons: Limited to students; credit limits are generally low.
Retail Credit Cards:
- Pros: Easier to qualify for; discounts or rewards at specific stores.
- Cons: High-interest rates; limited use outside the specific store or brand.
Prepaid Credit Cards:
- Pros: No credit check required; control over spending.
- Cons: Doesn’t help build credit; often comes with fees; no credit line.
Credit Builder Cards:
- Pros: Aimed at building or rebuilding credit; some offer rewards.
- Cons: Can have high interest rates; potential for high fees; low credit limits.
Best Credit Cards for People Without Credit
These are the best credit cards for starting to build credit:
Discover it Secured Credit Card: A secured card that helps build credit and offers cash back rewards.
- Benefits: Offers 2% cash back at gas stations and restaurants, up to $1,000 in combined purchases each quarter, and 1% cash back on all other purchases. No annual fee. It provides an automatic review of your account after 8 months to determine if you can transition to an unsecured card.
- Fees: 28.24% APR. No annual fee, but a late and returned payment fee up to $41.
Capital One Platinum Credit Card: Designed for those with limited credit history.
- Benefits: Designed to help build credit, it offers access to a higher credit line after making your first 5 monthly payments on time.
- Fees: 30.74% APR. No annual fee, but there is a late payment fee up to $40.
Petal 2 Visa Credit Card: Focuses on your banking history to make a decision, offering cash back rewards.
- Benefits: Earn 1% cash back on eligible purchases right away, which can go up to 1.5% cash back after 12 on-time monthly payments.
- Fees: 18.24%-32.24% APR. No annual, late payment or returned payment fees.
Journey Student Rewards from Capital One: Best credit card to establish credit for students.
- Benefits: Earn 1% cash back on all your purchases, which increases to 1.25% each month you make your payment on time.
- Fees: 19.99%-29.99% APR. No annual fee, but a late payment fee up to $40.
Step-by-Step to Get a Credit Card With No Credit
Taking these steps will set you on the right path to getting good credit cards for establishing credit.
- Check Your Credit Report: Even with no credit, ensure there are no errors in your report. You can get a free report from major credit bureaus.
- Compare Credit Card Options: Look at different cards for no credit. Consider fees, interest rates, and if they report to credit bureaus.
- Choose the Right Card: Pick a card that fits your needs. Secured and student credit cards are popular choices.
- Prepare Necessary Documents: Gather documents that prove your identity, income, and address.
- Apply: You can apply online on the bank’s website or in person attending the bank. Be honest in your application, consisting of:
- Personal Information: Provide your full name, birthdate, and Social Security Number.
- Contact Information: Include your current address, previous address (if you’ve moved recently), phone number, and email.
- Financial Information: Share details about your employment, income, and possibly your monthly rent or mortgage.
- Additional Information: Some applications might ask about existing debts, assets, or if you have a bank account.
- Security Measures: Answer questions to verify your identity. This might include past addresses or accounts in your name.
- Terms and Agreement: Read and agree to the credit card terms and conditions.
Approval times after applying for a credit card with no credit vary. Some offer instant approval, while others might take a few weeks.
Getting approved without credit
Being approved for the best starter credit card for no credit depends on various factors, more than just your credit score. Here are factors that can enhance your chances:
- Demonstrating that you have a regular and reliable income.
- Having a lower amount of debt compared to your income indicates you are not overextended.
- Make sure all the information you provide in your application is accurate, complete, and truthful.
- Possessing a checking or savings account can show financial stability.
- At least 18 years old and permanent address in the United States.
Bank Contact
Discover: 502 Market St, Greenwood (1-800-347-2683)
Capital One:1680 Capital One Drive, Virginia (1-877-383-4802)
Petal: P.O. Box 1150, New York (1-855-697-3825)
Conclusion
Getting a credit card with no credit is a practical step toward building your credit history.
Compare different credit cards to help establish credit, focusing on fees, interest rates, and benefits.
The application process, while straightforward, requires diligence and responsible financial behavior.
Disclaimer: There are risks associated with applying for and using credit products. Be sure to review the bank’s terms and conditions before accepting anything.
