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How to Get a Credit Card with No Credit History

Building a good and stable credit score has never been so important as it is today. If you have not established a credit record yet, you have the rare chance to build a credit history the right way. It will allow you to apply for larger loans later in life. In addition, your credit history determines whether you will get a decent job, a good home, a mobile phone deal, and preferential rates on insurance.

Before getting a pre-approved or secured credit card, you should first check out your credit report. Interestingly enough, you may have a file with the credit bureaus even if you have never borrowed money before – either the bureau has mixed up your personal information with somebody else’s or you might have fallen a victim of identity theft. In either case, you will have to set your credit report right before applying for a credit card. Because most lenders see bank accounts as a sign of stability, opening a savings or checking account is a good way to go about building a financial history. Later, it will make it easier for you to get a credit card.

Unpaid bills affect your credit history negatively; so, you should remember to pay all of your bills on time. You can opt for automatic payments or come up with a reminder system which helps you pay your bills in a timely manner. Furthermore, most banks in Canada and the United States offer very convenient automatic bill payment solutions.

Becoming a co-holder of someone else’s credit card or getting someone to co-sign a loan for you is one of the fastest ways to establish a credit history, although this strategy involves certain risks.

There is no better time to get a pre-approved credit card than during your college years. The reason is that lenders are willing to take risks with students because they know that parents will most probably bail them out if they can’t cover their monthly payments. If you do not have previous experience with credit cards, you should select a card with a low or zero annual fee and low interest rate. If you don’t qualify for a regular credit card, you may still apply for secured one. This type of card requires that you deposit a certain amount of money with a lender and your credit limit typically equals the deposit. Bear in mind that some credit card issuers are only slightly better than loan sharks; so, make sure you have read all sections of your credit card contract before signing it. Some credit card dealers charge excessively high annual or application fees and startlingly high interest rates. Credit unions usually issue secured credit cards with reasonable interest rates and annual fees.

You have struck a good credit card deal, if you managed to obtain a secured credit card with a low application fee and no annual fee which would automatically convert into an unsecured credit card in a year or so. Keep in mind that your credit card will not help you build a good credit score, unless the issuer reports to the credit bureaus in a regular manner.

Getting an installment loan is another option for persons who want to build credit. In fact, experts advise that you go for a mixture of installment accounts and credit cards. If you consider this option, you may take a small loan from your bank or credit union and keep the duration as short as possible (no more than 2 years). In this way, you will build credit history and limit the amount of interest you are required to pay.

Alternatively, you may apply for a credit card with your local department store. This card will not contribute much to your credit history, but it is usually far easier to get one than a regular credit card. Don’t overdo with department store cards: obtaining one or two of those is more than enough.