If you are new to credit, you may wonder if getting a credit card without a credit history is possible. The short answer is yes, but there are some restrictions and requirements must be met.
Credit cards offer convenience and ease of payment, but using a credit card for bad credit can have many consequences. For example, if you don’t pay your bill on time, you could face late fees or even worse. To prevent these issues, credit card companies usually have a strict policy regarding credit history.
What Does No Credit History mean?
No credit history means you have not had any credit reports in the past. This could mean you never applied for a credit card, had a loan, or used a credit score. Someone might have no credit history because they never had a credit account, had a few bad credit accounts or had their credit history destroyed. People with a zero credit score or credit history are called ‘Credit Invisible.’
Additionally, the consequences of having no credit history can be serious. It can also make it harder to get approved for a mortgage, get a job, or get a car loan. Someone with a credit history can get a lower interest rate on loan, but you may also have to give a more down payment. Moreover, someone with no credit history might have to pay a higher interest rate on loan than someone with a good credit history.
Credit Card Options for Credit Invisible People
Yes, it is challenging for people with no previous history to get credit, but not impossible. If you are an invisible credit person, then here are some credit card options that might be best for you!
Student Credit Card
Student credit card is typically issued to college students. You might not need a long credit history or high credit score, but it depends on the issuer and the product.
Student credit cards are quite helpful in building a credit score or history. Another benefit of having a student credit card is that some come with lower or zero annual fees and other benefits like cash back, discounts on dining, entertainment, etc.
One thing worth mentioning is that a Student credit card is like a usual credit card, so you might have to pay the internet on balance.
Secured Credit Card
Applying for a secured credit card is a nice option if you don't have a credit history. Many credit unions and banks issue secured credit cards against a security deposit.
It could be any fixed amount that the issuer holds as collateral. Once approved, the issue issues a credit card account with an initial credit limit that can be increased later by adding more funds.
Secured credit cards can be used to make purchases and build a credit history.
Retail Store Credit Card
Another option for invisible credit people is a retail store credit card. It works like any other credit card, and even appears on your credit report.
Moreover, using the card responsibly and making consistent and timely payments will help you build a credit history. Unlike student or secured credit cards, a retail credit card only works at stores or a group of stores associated with it.
More Options to Get Credit Card Without Credit Score
If applying for specific credit cards doesn’t work for you, then no need to lose hope. There’s still a solution for getting a credit card without any previous credit record. Not only will these options help you to get access to a credit card, but they will also help to build your credit score.
Invisible credit people can have a credit card either by:
Becoming an Authorized User
For this, you should have an existing account authorized to use. The account doesn’t necessarily belong to you. It could be a friend, family member, or anyone willing to allow you to use their credit account.
You will receive a credit card as an authorized user linked to that account. You can use this card to make purchases. However, the primary cardholder will be responsible for the account.
Getting a Co-Signer
Another viable option to qualify for a credit card is to apply with a co-signer. However, there’s one issue: most credit card issuers don’t accept co-signers. So hence, your options would be limited.
Once you find a credit card issuer that accepts co-signer, here’s what you should know:
- In case of non-payment, the co-signer will be liable to pay back your debt.
- Any fees for late payments or collection costs might be paid by co-signer
- Negative information, like late payments, would also be a part of the co-sogner’s credit history.
Apply for Low-Interest Credit Cards
Low-interest credit cards are an excellent option for people just starting their financial journey. Low-interest credit cards can help you save money on your borrowing costs.
This can be an excellent way to improve your credit score because it shows that you are responsible for your finances. There are several ways in which a low-interest credit card can help increase your credit score.
First, a low-interest credit card will help you to build your credit history. By using a low-interest credit card, you are demonstrating to lenders that you are a responsible borrower.
You can use many low-interest credit cards to build credit, and then later, when your credit score has become quite good, you can apply for a credit card with more limits.
Conclusion
Credit cards have become a way of life for many people. Credit cards allow us to buy things we want without paying upfront. We use them to get cash back and rewards. But what if I told you that credit cards could help you save money? They may even make you money!
With the importance of credit cards increasing daily, having a good credit history becomes quite valuable.
