While it is true that few things in this world are more frustrating than having bad credit, the one thing that may top it is having no credit at all. Having no credit means that you are an enigma to a credit card company. You have absolutely no payment history in which they can base a decision on and many of these companies are scared to gamble in the current economic climate. The good news is that you can still get a credit card, even if you have no credit history whatsoever. Here are a couple of good tips:
- Credit.com recommends getting a secured credit card to help you begin establishing good credit. Secured credit cards offer individuals with no credit establish a good credit history and are easy to get. In a typical secured card scenario, you apply for a credit card with the issuer and make a deposit into a savings account held by that credit card company. In most cases, the deposit can be anywhere from a few hundred dollars to several thousand and the deposit is usually interest bearing. The credit card company will issue a credit card to you and set the limit to match the amount of your deposit, or slightly higher. As long as you make your regular monthly payments on time every month, the money in your savings account will remain. However, if you default, the credit card company will take control of your account and apply the funds against your outstanding balance. There is little to no risk for the credit card company, which is what makes getting these cards easy for individuals with no credit.
- Investopedia also recommends obtaining a private label store credit card to establish credit before applying for a major credit card. This is a less desirable option than a secured card as your purchasing ability is limited and the fees are higher, but if you lack the funds needed to establish a savings account for a secured card, you can open an unsecured credit card account with a store rather than a major credit card.
- CreditScore.net also suggests taking out a personal loan. Although a personal loan is not quite the same as a credit card account, establishing some payment history through a personal loan will help you obtain a credit card in the future, as long as you make your payments on time every month. This option is usually less expensive than an unsecured credit card.
Establishing good credit habits from the beginning is the key to creating a sound and secure financial future. While getting your first account can be tough and considerably more expensive than future credit accounts, it is well worth the effort. After a few months of making timely payments will allow you to upgrade to a credit card with a higher limit and less expensive interest.
