Applying for a Credit Card with No Credit
The credit card market is highly competitive, and options are available for almost everyone. But for those people who haven’t yet earned a sound financial reputation, those options are more limited. Credit card applicants without an established credit rating may be subjected to exorbitant fees and higher interest rates. But everyone has to start somewhere, and having a credit card, even one that’s not the best, and making responsible payments is an excellent way to build good credit. The following information can help anyone select their first credit card.
Secured Credit Cards
The easiest way to earn a credit history and rating is to apply for a secured credit card. Secured credit cards are basically debit cards that function as credit cards, with the cardholder making a deposit into an associated savings account. Although the card holder is still required to make payments to the credit card’s balance, leaving the savings account intact, the money is always there for the bank’s taking should the card holder default, which completely eliminates the bank’s risk. It’s a viable option for people who want to a build a credit history from scratch. However, it is important to make sure the credit card company reports the earned financial history to one of the three major credit reporting bureaus.
Opening a Checking or Savings Account
While opening a bank account does not affect a person’s credit score or credit history at all, it can help aspiring cardholders build a steady financial relationship with a bank. After maintaining a healthy account balance in a checking account for a few months, some banks may approve the account holder for an unsecured credit card. Showing financial responsibility with a bank is another good step in building financial relationships that can last a lifetime.
Finding a Co-Signer
Another way to gain instant credibility and receive approval for a good unsecured credit card is through the help of a co-signer. When a co-signer signs a credit card application, they are basically contributing their credit score to partially represent the financial stability of the applicant. However, it is important to note that if the card holder does not make the monthly payments on time, this can negatively affect the credit score of the co-signer, regardless of how old the account is.
These are all good options for people with no credit who are seeking their first credit card. Once that first account has been opened, a history of responsible payments and credit management will earn a sound credit rating, encouraging lenders to accept the borrower as less of a risk and providing additional options with lower fees and more attractive interest rates.
Similar Posts:
- Immigrants Labeled as No Credit History
- REVIEW: Capital One Secured MasterCard
- The Card for People With Bad or No Credit History
- Secured Credit Cards and Credit Management 101 For Students
- Establish Good Credit with a Secured Credit Card
