How to Get a Credit Card With No Credit History – This may seem like a catch 22 situation for many of you if you have ever applied for a credit card with no credit history.The credit card issuer will ask you to get a starting credit score before they can issue you a card,but the problem is that one of the biggest contributing factors to your credit history rests upon your past credit card payments.
How to Get a Credit Card With No Credit History
These are a few pointers that will give you some idea as to what is required,before you actually go ahead and apply for your first credit card without having any previous credit history.One thing that has to be said is that there is no guarantee that these ideas will definitely get you your first credit card,but in past instances they have been pretty successful.
This is my fundamental first point and also is the most important.Since many of you reading this might be up for your first job,the credit card issuer will need to ascertain if you have the repaying capability before they can start a financial relationship with you.
For someone with no credit score,your monthly income should be preferably atleast 15-20% above the minimum wage of the state that you are living in.Also remember that this has to be only you personal income from your job and cannot be a family income or income from a part time business,which does not have a steady income into your checking account.
Leverage with a Co Signatory
This is called the ol’ piggyback and has been used successfully by lots of first time credit seekers.In fact many credit card issuers give cognizance to this method of co signing.The idea behind this is to signup for the credit card with a person who already has his/her credit in good standing – a wise choice would be an older family member.What happens is that because of the co signers good credit rating,the card will be approved and this mean that you also can use that card for purchases.
Now although this may seem like a great idea,there are a few advantages and disadvantages to it.
Upside – Since you will be riding on the co signers good credit,some of those good credit points will ultimately transfer onto you.This will prepare you for a good financial future and possible even allow to you take a mortgage sometime.It will literally kick-start your credit on a good note.
Downside – If you use the card irresponsibly and don’t make even the minimum amount due on the card every month, or miss out on a payment, there is a good chance, you will not only ruin your own future credit, but also the co signers, unassumingly who has had an unblemished credit history so far.
Secured Credit card
A secured credit card is so called because you have to keep a security amount as collateral with the card issuer equal to the amount that is being given as credit to you. This is perfect for first time card users and students. For example, if you give the bank a $500 security deposit, Hey will issue you card with a $500 credit line attached to it.
You can use this card as a normal credit card and pay its fees on time. If and when you decide to stop using the card, you simply clear off the debt from it and you can collect your security deposit.
After a while. If you use the card well, make regular payments on it and begin to collect good credit points from the credit bureaus, the bank might give you an unsecured card.This will be the start to your financial independence ad the also the start to a healthy credit history.
The most important point to note while choosing a first time secured card is to check whether the issuer will be timely reporting your good credit to the 3 credit bureaus. This is of utmost importance,else it defeats the purpose of applying for a secured card.The aim is to start a good credit history and slowly build a good credit score that will benefit you in future.
Few things to note with respect to secured credit cards is that the signing up fees and other miscellaneous fees might be high, so make sure that you choose a card that has low joining fees.
Retail and Student Credit card
These types of credit cards are issued quite easily with its important to read the fine print before signing up. If you are a student enrolled in college or university, you can apply for a student credit card and get a small line of credit.Also,major retail chains have their own cards that can be used only in their own network of stores.
The good part is that many of these types of issuers do not check your credit history, assuming that you are too young to have any. Also retails chains are only concerned with you spending in their stores and their earning on the interest- which is a double whammy for them- that’s why they issue a lower limit card for shopping. Few people default on these cards, and even if they do the loss wot be that much.
The bad part is that the credit limit is low on these cards as well as high interest. Most of these cards might not help you start off your credit and do not report your timely payments to the bureaus which is not beneficial for your future credit score.