When it’s time to build up credit, the fastest and easiest way to do so is by signing up for a credit card or taking out a line of credit. Having more than one credit line, paying your bills in full and on time will help improve your credit score. Once stable credit is established, one can easily qualify for those bigger life purchases, such as a home or vehicle. The question is, which credit cards help with this process.
There are several credit cards you can use to help build your credit, but certainly not all of them. Some of the best cards on the market require an excellent credit score to be approved. Here’s a look at the best credit cards for those with no credit.
Who Needs Credit Cards for No Credit?
Exactly which demographics lack in credit history and have trouble qualifying for a credit card? The two groups below are the ones most often affected:
Young Crowd– The CARD Act of 2009 stated that anyone under 21 and not authorized on a parent’s credit card account must provide proof of income to repay loans. Their only other option is to have an adult co-signer. This regulation has caused a 17% decline in new credit card accounts opened by students between 2009 and 2010.
New United States Residents- If you recently moved to the United States from another country you’re not going to have an established credit history. Sure, you may have established credit in your home-country, and it may even be excellent, but those scores don’t transfer over with you.
Even though these groups are the most likely to lack credit, there are still plenty of 30+ year old’s that have never taken the time to build their credit history. No matter what category you fall into, there are cards on the market that can help you out.
Secured Credit Cards
A lot of people stray away from secured credit cards because they require you to put down your own money upfront that acts as your credit line- but it’s a great alternative if you simply cannot get approved for a traditional unsecured credit card. It will build credit because they report to the major credit bureaus.
Capital One® Secured MasterCard– The credit line may start low, but your security deposit can get you a credit line as high as $3,000, depending on creditworthiness. You will have access to monitor your credit score and access to other tools, too. Depending on your payment history, you could qualify for a credit line increase.
First Progress Platinum Prestige MasterCard® Secured Credit Card– Spending limits vary by applicant, but that depends on how much you load onto the card. The 14.99% variable APR isn’t too bad considering how high some other secured card APR’s can get.
If you’re still confused at how secured cards work, read this article.
Low Limit Credit Cards
Most people who think of credit cards typically are thinking about an unsecured credit card. If you have no credit history you may be able to get approved for an unsecured card, but you will likely have a low credit limit to start. This may not allow you to buy that new TV you really want, but it will allow you to build your credit without putting your own money down first. If you charge your card consistently and pay it back in full each month, you’ll have a great score in no time. Popular options include:
Credit One Bank® Gas Rewards Credit Card- This is one of the very few credit cards for those with no credit or poor credit, that offers rewards. Card holders earn 1% back on all gas purchases with no limit to the numbers of rewards you can earn. There is a rather high annual fee, but it is reduced for the first year. You also have the option to choose your card design from their premium gallery.
Prepaid Debit Cards
First thing to point out is that prepaid debit cards will NOT build credit. They work like a secured credit card- where you load your own money onto the card- but will not report your account history to any credit bureaus. This card type is only for those who are learning how to manage charging and paying off their balances, and for those who simply need a charge card for the sake of not carrying around a lot of cash. There are several options when it comes to prepaid cards; here are our favorites:
READYdebit Platinum Visa Prepaid Card – The card comes with the option for online bill pay, free direct deposit, is FDIC insured, and also includes a free credit score tracker. By being able to track your credit score, you can always be informed about your progress. *Note, this does NOT mean they report to any of the major credit bureaus.*
Having a co-signer on your credit application is another available option. However, it increases the risk for the co-signer if they are not using or actively monitoring the activity of the card. You could also consider getting small loans to pay off instead of credit cards. The major downside to that is you’ll be paying a lot more in interest over time. In an ideal situation, you need to just find a card that works for you and keep up on your payments.
Don’t worry if you are having difficulty qualifying for a traditional credit card due to a lack of credit history. If you are willing to put forth a little cash and a little effort, you can get a card to help you build your credit score.
*American Express Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.
*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.