If you want a credit card and this is your first time applying, you may have a hard time finding an issuer that can give you a card without a lot of hassle. Some companies will take the time to research your bank account, salary, and employment history. Many of the major providers will not risk issuing credit cards to people who have no loan history.
One needs to establish a good credit history to increase their creditworthiness. Obtaining some type of credit is the only way to have a credit history. Meeting your payments and paying off debt balances on time will earn a person a higher credit score. But where will you start to get any kind of credit? There must be a starting point where you can build your credit history. Because of this need for people with no credit histories, some financial institutions offer some types of credit cards with no credit.
The most common type of credit card without credit is the secured credit card. When you apply for this card, the issuer will not check your debt records; therefore, you can be assured of approval even if you have not yet established a credit history. You will only be required to deposit a fixed amount of money ($200 – $300) into a savings account at a bank. This will serve as collateral to ensure that in the event you default on your balance, the lender can get their money back. The amount of your deposit will be the equivalent limit that you can use. The lender will only collect from the amount in your savings account if you default on your payments.
Secured credit cards will report your credit payments to the major rating bureaus on a monthly basis. The credit bureaus will keep a record of your credit history and this will be the basis of your credit scores. This will serve your purpose of building a good credit history. Therefore, you must stay within the spending limit and pay your bills on time so that your credit history is good and you have a high credit score. Earning a high credit score will increase your creditworthiness and make you eligible for credit cards with better offers, such as lower interest rates, higher credit limits, rebates, discounts, rewards, and many other benefits and privileges.
There are a handful of no credit credit cards on the market today. Some examples are Orchard Bank Classic MasterCard, Public Savings Bank Classic Secured Visa®, IberiaBank Visa® Classic Card, AccountNow® Prepaid Visa® and many others. Most of them have introductory offers like no annual fee for the first year, no activation fee, minimum initial deposit, etc.
Shop around and compare the benefits you can get before you finally decide to order one. Once you have your credit card with no credit, spend within the limit and make your payments on time. Within about 18 months, you’ll have your credit history established, and then you’ll be able to apply for other types of cards that may offer better benefits than the one you have.