So you’ve made the decision to obtain a credit card. You’re fiscally prudent and confident in your ability to make the monthly payments. But there’s a catch. You lack a credit history, which is a record of your previous financial activities.
This is when things can get difficult. Without a credit history, you may be unable to obtain a card. However, without a credit card, it might be difficult to create a credit history. But don’t be alarmed. Even if you have no credit history, you can obtain a credit card. Continue reading to find out how.
What Does ‘No Credit History’ Actually Mean?
You may not have a credit history if you’ve never had a credit card or loan, for example. That means you haven’t used credit or a lender hasn’t reported your debt management to at least one of the three main credit bureaus, Equifax®, Experian®, and TransUnion®. People with no credit history are sometimes known as credit invisibles.
What to Look for When Getting Your First Credit Card
When considering credit cards for the first time, it’s a good idea to look for any eligibility conditions first. To apply for your own credit card account, for example, you must be at least 18 years old.
The next step is to decide what kind of credit card you want. It may be beneficial to investigate interest rates as well as any annual or other prospective expenses. Capital One features a great credit card comparison tool that allows you to search for the best credit card for you based on your credit requirements, reward type, and other considerations.
Before applying for a credit card, you can also determine if you’re pre-qualified or pre-approved. Because pre-qualification and pre-approval are considered soft inquiries, they have no impact on your credit scores. Capital One, for example, provides speedy pre-approval that will not harm your credit scores. Remember that pre-approval is not the same as applying for a credit card, which may result in a hard inquiry.
Credit Cards for People Who Have Bad Credit
Obtaining a credit card without a credit history can be challenging, but there are some credit cards that may be suitable for credit invisible individuals.
Credit Card Security
If you have no credit history, many banks and credit unions provide secured credit cards.
This is how they work: You make a monetary deposit, also known as a security deposit, which the issuer keeps as collateral. The Capital One Platinum Secured card, for example, requires refundable security deposits of $49, $99, or $200 for a $200 initial credit line. If you are authorized, you will be issued a credit card with an initial credit limit. You may also be able to raise the credit limit by depositing additional dollars.
The card can then be used to make purchases, just like any other credit card. Furthermore, by carefully using your credit card, you may be able to begin creating a credit history and recoup your security deposit.