Can You Get A Credit Card With Little to No Credit History?

Credit card issuers rely on your credit score to assess your financial situation before approving you for a credit card. But you need at least one account – that has been active for over six months – to have a credit score.

Some people don’t realise that they have a credit history due to their mobile phone monthly billing or house rent. So you should start by applying for a free credit report from the bureau to confirm its availability or absence.

If you don’t have a credit history, don’t worry. Some credit card issuers understand the dilemma faced by first-time credit card applicants, and you may still qualify for a credit card if you meet a certain criteria:

1. Have an income

   Before you can get approved for a credit card, you will be expected to provide evidence of your independent income or assets to demonstrate your ability to repay the minimum balance each month. Keep in mind that you cannot include the earnings of your spouse, parents, or siblings unless you have sufficient reason to access that money. The higher your earnings, the greater the chances of getting approved for a credit card even with no credit history.

2. Get a cosigner

   There are several types of credit cards available to people with no credit history. But they may come with high interest rates and limited options. If you can find someone with a good credit history and is willing to cosign on your first card, such as a parent, partner, family member, or close friend, you can piggyback off their financial information to enjoy better interest rates and more options. Anyone thinking about co-signing for an individual should make sure they are willing to be responsible for the full amount of the debt if the other individual does not pay. Full payment is what a co-signer is agreeing to and it is important to plan for the worst case scenario.

3. Choose a secured credit card

   Secured credit cards are recommended for people with no credit history or bad credit. Unlike unsecured credit cards, these cards require a security deposit that issuers can use if you are unable to make the payments on time. Your activity on the card is reported to the credit bureaus, which means that you can build a good credit history by making timely payments. This is also a good option for people just getting out of a debt situation as the company takes no initial risk and then once they have built confidence in you then you can more to an unsecured card.

   If you’re a student, you may consider applying for a student credit card. You just need to provide proof of enrolment in a qualified university or college. However, these cards usually have lots of fees and higher interest rates. However, always remember not to apply or obtain more credit then you can afford pay off. Using credit to supplement insufficient income is a slippery slope and result in debt that you can’t get out of without the assistance of a trustee.

Final note

If you qualify for a credit card without credit history, you should take advantage of the opportunity to keep your credit in good standing as the bank may be changing you higher interest rates that can easily get out of control resulting in personal debt. If you encounter problems that affect your ability to make the monthly payments, you should discuss the benefits of credit consolidation for your situation to avoid more involving credit management measures down the line.