How to Get a Credit Card With No Credit
To get a credit card with no credit, start by trying to establish a line of credit with a prepaid credit card, secured credit card, or store credit card. Once you build up a little credit history, obtaining a regular credit card from a major lender will be much easier. If you don't want to spend time building up your credit history, consider asking a family member who has good credit to be a cosigner when you apply for a major credit card.
Try establishing a line of credit with a prepaid card. A prepaid credit card is functionally identical to a debit card but can be used to build your credit score. You put a certain amount of money on the card, say $500, and that becomes your credit limit. When you've reached that amount, you need to deposit more money before you can use the card again. Make sure your credit will be recorded when using a prepaid card. Many prepaid cards are easy to obtain but do not actually build your credit score. The types of cards that build credit may be slightly more expensive to obtain, charging an activation fee, but also have the perk of establishing credit over time. Ask when purchasing a card whether your charges will be reported to a credit agency. If you're purchasing a card online, there's usually a number you can call with questions. There should also be something about this in your contract. The best way to build credit on a prepaid card is to use it responsibly. Keep track of how much money you're spending to avoid overdrawing and refill the card each month. This will help you build a solid credit score and eventually be able to obtain a real credit card. Apply for a secured credit card. A secured credit card is much like a prepaid credit card. You put a deposit down on your secured card, typically anywhere from $200 to $5,000, which then becomes your credit limit. Unlike a prepaid, your deposit becomes your monthly credit limit, not your total credit limit. This means that a $500 deposit could give you $500 of total purchasing power each month, for months on end. Many credit unions and banks offer secured cards to customer. Ask your bank about their secured credit options. If your bank does not offer a secured card, see if you can get a secured card from another institution. Gather a lot of information about policies regarding secured cards before purchasing one. Many secured cards charge unnecessary fees, such as insurance policies, for up to $55 a month. Make sure you work with an established bank or credit union with a good reputation when selecting a secured card. On occasion, secured credit cards can be built up into real credit cards once you've built up a history. Use your card responsibly and see if you can eventually get an actual credit card. Consider getting a store credit card. Store credit cards are often easier to get than a regular credit card from a major lender. Although store credit cards often sport higher interest rates and lower credit limits, using them to establish a credit rating can be an effective way to get around credit rejections based on a lack of credit history. The vast majority of store credit cards affect your credit history. This can be a positive if you're looking to build your credit score. Be aware how credit works. It's good to have some debt if it's usually a small amount and you're able to pay it off each month. Do not charge more than you reasonably afford at a store. Try to keep your debt to credit ratio low, that is try to owe less than 20% of your total credit line. Many people feel tempted to overspend when using store credit cards, especially if it's a card for a store they love and shop at frequently. Try to have self control when using a store credit card. Overspending and maxing out store credit cards can be as damaging to your credit as poor spending habit with regular cards. Survey your student options. Students can take advantage of a few special bargains designed for them. If you're a college student, you can try to build your credit via credit card offers specifically targeting students. Find student credit card offers. Students are among those who do not often have a solid credit history. Specialized lenders have produced unique offers for those who are in school to help these individuals get access to credit. Look for student options at local banks or your college's credit union. Student credit cards have been somewhat more difficult to secure since 2010 due to a change in federal lending laws, so be aware of that before looking into this option. However, with some searching you may still be able to find some student offers. Be wary of interest rates going into the agreement and always read the fine print. Non-established banks sometimes use student credit cards as a means to take advantage of young people who do not know finance well. Only work with established banks and local credit unions and never trust a credit card company that offers you a card as part of a promotional deal. Get a charge card. A charge card is a type of credit card in which you have to pay the balance in full each month. You cannot roll balances over from one billing cycle to the next. American Express and Diner's Club are well-known and reputable organizations that offer charge cards. A charge card can help you build your credit score because you're forced to pay off the balance, which will reflect well on you. Use a charge card responsibly. Pay your bills on time and only use credit when you absolutely need to. Try a cosigner or authorized agreement. A cosigner agreement is one where another individual puts his own credit on the line for someone who has credit issues, or in this case, no credit. A co-signer agreement greatly increases the likelihood of getting a credit card, along with the terms of the credit card itself. Being an authorized user on someone's account allows you to use their credit card while building your own credit score. Getting a co-signer is usually pretty hard, and they often end up being family members. That's because agreeing to be a co-signer has very little upside. Your credit is impacted, often for the worse, by someone out of your control. You will have to promise whoever cosigns for you that you will use the card responsibly. Make sure that the borrower and cosigner both understand all aspects of the credit card agreement. Cosigning for credit can be tricky because if the borrower defaults, or doesn't pay, the cosigner can get stuck in the middle. Becoming an authorized user on someone's account may be a better means to secure your credit score. Parents often allow college students to be authorized users on their cards, allowing them to make charges for emergencies or school supplies. Check whether a credit card company reports authorized users to credit bureaus before signing up for the arrangement. Becoming an authorized user is much easier than getting a co-signer, as co-signers are disappearing as a practice. Read the terms and conditions of your credit card. Make a point of knowing the terms and conditions of the credit card you're interested in before you sign anything. A lot of credit cards disguise big fees or display low "teaser" rates to get customers hooked in. Know exactly what you're getting into by reading the fine print first. Read reviews of credit cards before signing up. An occasional bad review is normal and not a cause for concern, but a large amount of bad reviews for one credit card company is probably a bad sign. Watch for late fees, overdraft fees, and any increases in interest you can expect over time. Banks may try to sneak in extra fees if they know this is your first card, so it's not a bad idea to have an experienced credit card user look over the contract for you. Learn credit card terminology. Before signing up for a card, spend some time learning about credit card terminology. This will help you asses what card is right for you. The APR is the interest rate you pay on your credit card debt. For some credit cards, you pay 0% interest if you pay off your credit card in full every month. Any money that's not paid after the grace period gets levied with interest payments, typically around 10% - 13%. Most rewards credit cards come with annual fees. A $50 - $100 fee is common for features like airlines rewards or cash back. Avoid credit cards that charge monthly fees, or those that charge exorbitant annual fees. Decide on a credit card type. A basic credit card is probably a good credit card to start out with. However, you might also consider a rewards card or cash back card especially if your bank offers it as a promotional deal. Rewards points cards mean each dollar you spend gets you rewards points. Use those rewards points to redeem everything from airline tickets to gas. These cards typically have higher annual fee, blackout dates, higher APR, and points that are subject to expiration. Cash back cards. Earn cash back on typically around 0.5% - 2% of the money you spend on your credit card. Typically there are limits on the amount of cash back you can receive. Pay off your credit card in full. In order to build the right kind of credit, think of your credit card in terms of real cash. Many people see a credit card as free money or a free pass, but the debt you accrue on a credit card is very real. Therefore, only spend money that you have unless it's an emergency, like a bill for an unexpected medical procedure. Charging more than you can afford leads to you only making minimum payments each month and even falling behind on payments. This can lead to a poor credit score. Make payments on time. When the creditors send you your monthly bill, pay it as soon as you can. Missing payments consistently will seriously dent your credit score as it signals that you're not good about keeping up deadlines. Late payments are usually reported to the credit bureaus only 30+ days after the due date. That means you may be safe if you miss a payment by a few days. However, don't make a habit of being late as you'll get comfortable being lax on deadlines. Mark on your calendar when you credit card payments are due. Watch your debt to credit ratio closely. It's important to understand debt to credit ratio when getting a credit card. This is the amount you owe versus your spending limit. For example, say you get a credit card with a $5,000 limit on it. That's the maximum monthly amount you can spend. If you spend $1,000 on the credit card before the month, your debt to credit ratio would be: $1,000 (debt) ÷ $5,000 (credit) =.20, or 20%. For you to build the right kind of credit history, you want your debt to credit ratio to be on the lower side. This doesn't mean that you can't use your credit card, but be careful about the purchases you make and try to avoid maxing out. A credit to debt ratio of 100% can damage your credit score. Ideally, try to keep your credit to debt ratio below 20% each month. Below 10% would be even better, but this may be difficult to maintain if you're a first time credit card owner as your credit limit might be on the lower end. Make responsible decisions with your credit card. When it comes to building a high credit score, responsibility is key. The best thing for your credit score is being a responsible credit card user. If it's an option, sign up for an automatic payment system. This way, you can assure that you'll never miss a payment as payments will automatically be made in your name. Register for online banking if you're not already. Making payments online can help you stay on track as the convenience means you'll be less likely to miss a payment if you don't make it to the bank on time. Sign up for text and e-mail reminders so you stay up to date on when payments are due. Use all your credit cards once a year. If you need to build credit, you need to actually use your cards. Try to set up one small monthly expense on your card, like your Netflix or Hulu bill. This will keep the balance low but allow you to build a credit score. Just make sure to pay off the bill at the end of the month. 
Try establishing a line of credit with a prepaid card. Apply for a secured credit card. Consider getting a store credit card. Survey your student options. Get a charge card. Try a cosigner or authorized agreement. Read the terms and conditions of your credit card. Learn credit card terminology. Decide on a credit card type. Pay off your credit card in full. Make payments on time. Watch your debt to credit ratio closely. Make responsible decisions with your credit card. 