What’s the best way to receive lots of great credit card offers? Easy. Have great credit! Yes, credit builds, and the best way to get more is to already have some. So this raises the question, how are you supposed to start building credit when you don’t have any to begin with? You may be wondering how to get a credit card with no credit.
There are ways to get credit even when you don’t start with any. But you need to understand how. Many people, especially young people who are looking to venture out and gain some financial independence from mom and dad, don’t know how to get a credit card with no credit. Others don’t understand why their applications are repeatedly rejected.
How to Get a Credit Card With No Credit?
Know The Score
Before asking how to get a credit card with no credit, be sure you know that you actually don't have credit. Many young adults don't realize that they do have a credit score established.
Say that you’ve just graduated and you’ve got a lot of expenses. Even if you’ve not “left the nest” and are still getting some support from family, you’ve still got all kinds of things you’re responsible for paying for: gas, food, your cell phone bill, etc. If you apply for a credit card to cover some of these expenses, you’ll probably learn that you need a credit score to be approved.
If you’ve got no credit history, meaning that you’ve never bought anything with credit before, then you don’t have the credibility yet to assure credit card companies that you’re going to pay back what you owe.
Buying something on credit is the same as taking out a loan. If you had money to lend, wouldn’t you want to know that the person you’re loaning money to has a history of paying back what they owe? For that reason, many credit card companies won’t take a chance on someone without a credit history or someone who doesn’t have a credit score.
That said, everyone has to start somewhere. Some credit cards are designed for first-time credit users. They’re easier to qualify for, even if you don’t have credit, but they usually have higher interest rates and lower credit limits. More on these below.
What Credit Card Companies Look For
If you don’t have a job, you’re going to find it difficult to get a card, sometimes even when you’ve been told that you’re “pre-approved.” Being able to demonstrate gainful employment, meaning that you have a salary or earn fairly predictable wages from month to month, is the best way to get a credit card with no credit. Being gainfully employed is the first step in how to get a credit card with no credit.
If you don’t have a job yet, or you’re self-employed and don’t have a boss who can vouch for your income, you’ll probably face rejection when applying for cards. That doesn’t mean you have to give up before you start looking. Some companies may be willing to extend you credit even without proof of income, but you’ll need to be persistent.
What is a Credit Card?
Let’s start with the very basics. A credit card allows you to make purchases without having the cash on hand. Unlike a debit card, which requires you to have funds available in your bank account, with a credit card you buy things on credit. All of the purchases you make are recorded. At the end of the billing cycle, usually at the end of the month, you’re given a statement.
This statement details all the purchases that you’ve made in the past month. $12.35 for hamburgers, $18.59 for a pair of shorts, $3.49 for a macchiato, etc. You’ll see the total balance for everything you’ve bought, but that isn’t the amount you’re required to pay. Credit card companies only require you to pay the minimum balance. It’s a small portion of what you owe.
Sounds like a great deal, right? But beware. If you pay only the minimum balance and continue using the card, then you’ll have to pay a lot more in the long run. See, the credit card company charges interest on whatever you owe. This rate might be high, or it might be very low depending on the rate of interest you agreed to when you got the card.
Don't Pay Interest!
In our previous example, where the total balance on the card for one month is $34.43, you may not be worried about having to pay an interest rate of 15%, 18%, or even 22%. After all, it’s just a few dollars, right? But if you’re using your card often or making bigger purchases, the total can easily become hundreds or even thousands of dollars.
If you’re still new to the world of credit, you might think that the 0% APR, or annual rate of interest, means that you don’t have to pay interest and you can let your balance roll over from month to month with no negative consequence. But most cards offer a temporary, low APR which jumps up after a predetermined period, for example, after eighteen months.
Whatever your interest rate, there is a way to avoid paying any interest on your card. Simply pay the full balance at the end of each billing cycle, and you won’t be charged interest. Using credit cards this way also helps you to build credit.
The Importance of Building Credit
Learning how to get a credit card with no credit also involves learning how to build and establish credit. So if the best way to avoid paying more for the things you buy is to pay the total balance every month, then why bother with a credit card at all? If you use cash, or even a debit card, you can spend the same amount and not have to worry about interest.
Well, sometimes you might need a credit card to cover sudden expenses you weren’t planning for. Consider what would happen if you suddenly lost your source of income? Even if it means paying more interest, credit cards can be a lifesaver if you save them for those times when you really need them.
But this isn’t even the best argument for you why should get a credit card. The real reason credit cards are so valuable has nothing to do with covering one-time purchases. Using credit responsibly is the quickest way to build more credit. Remember your credit score? This number will come up when you try to buy a car or home.
A high credit score, around 700 or above, means that you can get a loan at a lower rate of interest. A low credit score, however, might mean that you don’t qualify for the loan you want at all. Responsible spenders invest a lot of time and energy into building their credit over time.
Tips For Building Better Credit
Paying the total balance on your credit cards is a great way to build credit, but sometimes this isn’t always possible. So what else can you do to build credit? Once you have established a history with a credit card company, you can apply to have your credit limit raised. This can help you build credit faster as long as you don’t change your spending habits.
Even without a credit card, consistently paying your bills can sometimes improve your credit score. If the billing account is in your name, your utility company may report your payment history to the credit bureaus that decide your score. Pay all your bills on time with no late fees, and you will likely see your credit score go up.
The Steps for Getting a Credit Card
If you’re looking for a job, you’re probably putting in as many applications as possible. But this is actually not the best strategy when you apply for credit cards. Why not? Because each application requires a credit check. Credit bureaus can lower your credit score simply because a lot of people are trying to access it all at once.
Take the application process slow. If you are turned down for several major cards in a row, then it’s time to pause and rethink your strategy. Many major retailers offer easy access to credit cards. The drawbacks are that these cards can usually only be used at specific stores and they carry high interest rates.
Store credit cards are a good stepping stone that you can use to get the major cards you’re after. If you can use a store card responsibly, you build credibility and help your credit score. From there, you can apply for better cards at better rates over time.
In addition to store cards, if you’re enrolled in college, this is a great time to apply for a credit card. Student cards are meant for people without credit and who may not be employed. A parent can also help you get a card if they have good credit and are willing to cosign for you. This means they agree to pay the minimum balance if you can’t.
How to Get a Credit Card with No Credit - The Conclusion
So now you’ve got some idea of how to get a credit card with no credit. You should be careful about how you use your credit cards, but keep using them if you want your credit score to go up. Your first card helps you build credit that brings with it better and better offers if you use your cards wisely.