How to Get a Credit Card With No Credit History

If you’ve never taken out a credit card or applied for a loan, then you may have a low credit score, or in some cases, no credit history at all. Credit history refers to your history of taking loans or credit and paying them back. It shows lenders an idea of how well you handle credit and gives them a snapshot of your history with financing.

Your credit history is an important factor that most lending agencies and credit card providers will consider when assessing your application. A good or excellent personal credit score can help to open the door for a number of financial products, including certain credit cards. Generally, credit cards that offer the best rewards and most generous benefits will require applicants to have a higher credit score.

If you’re thinking of taking out a credit card for the first time, keep in mind that there are a few different alternatives that you could consider.

First, a few credit card issuers don’t require credit history to apply. Instead, they use what they call “alternative approval criteria,” which includes banking history.¹

Another option is to wait until you build up your credit history before you open a credit card. Some credit reporting services let you choose to report payments to utilities and telecom companies on your credit report.² Over time, consistent and on-time payments could positively impact your credit score.

Another alternative to taking out a credit card yourself, is being added as an authorized user on someone else’s account. This could be a family member or a trusted friend. They have to give permission, of course. They may also be able to determine your credit limit, too.

When looking for a first-time credit card, you’ll want to look for a card that’s easier to qualify for, one that you may be eligible for even if you have no credit history. Fortunately, there are a number of cards available today that you can choose from.

Here’s a look at a few available options:

Student cards are an option for those still in school. To get one, some creditors will require you to prove that you’re enrolled in a qualified college or university. You have options within this category (some student cards offer rewards, for example), so do some research before choosing.

• Pros: Lenders are generally more forgiving of lower income and/or no credit history. Many cards include financial planning tools, such as access to your credit scores.
• Cons: Some student cards have high fees and high interest rates.

Retail credit cards (also known as store credit cards) are offered by retailers to help build customer loyalty and promote sales.

• Pros: Generally easier to qualify for than more general cards.
• Cons: Only valid in the issuing store. Interest rates are often high.

You may also want to consider a secured credit card. With these cards, you generally deposit funds in an account and the bank issues a card with a credit limit equal to your deposit. Many banks offer the option of converting a secured card to a traditional card after you establish a sufficient payment history. At that point, you get your deposit back.

• Pros: Easier to get than traditional cards because they are low-risk for banks.
• Cons: You must have funds to deposit. Credit limits are usually low. Some banks don’t report secured card activity to the credit bureaus, so it’s good to check before you apply if you would like to work on building your credit history.

If you have no credit history, you can still apply for a card. Just make sure you take the time to check your credit score first. Then, carefully research your credit card options so you know which cards you may be eligible for. Then apply for the one that’s the best fit for your needs. Normally, you can fill out the application online and will be able to tell relatively soon whether you are approved. Just remember that it’s good practice to only apply for one card at a time. Too many credit card applications in a short period could negatively impact your credit history.

Once you’ve evaluated your options and chosen the card you want to apply for, it’s a good idea to read the terms and conditions. Be sure you understand the fees and interest you’ll pay, and other terms of your agreement. And when your card arrives, it’s important to use it responsibly. Try to use roughly 30% or less of your available credit (Note: the percentage that you’re using is known as your “credit utilization rate”).³ This approach may help you to keep and build your credit. And as always, be sure to make your monthly payments on time each month and ensure that you make the minimum payment.