How To Get A Credit Card Without Credit

By Matt

Credit cards are an extremely useful and arguably necessary means of making financial transactions in today’s increasingly digital world. Consumers without credit cards can find themselves limited in their purchasing options. Most online purchases require a credit card. Even free trials of online services typically ask for a credit card number before the registration process can go ahead.

Finding a great last minute deal on a vacation can be very exciting, but that thrill will quickly diminish as you realize you will need a credit card to make the purchase before the deal expires. And there’s no slicker way to pay for a meal on a date than slipping that gold card into the restaurant’s black billfold.

Click here to compare credit card offers, including offers for those individuals with no credit

Credit scores

Credit scores are used by credit issuing institutions to determine an applicant’s eligibility to receive advance funds. Scores are based on an individual’s historical use of financing, including outstanding loans, payment record, percentage of available credit used, and the frequency of credit checks.

Credit scores are created through the use of credit. If an applicant has no credit score, then institutions will be hesitant to issue a card. This can seem like a bit of a catch 22; no score means no credit card but without a credit card, there will not be a score. Finally, people with a poor credit score, that is, a history of credit abuse, will find themselves in a similar or worse position as people with no credit score.

Three ways to get a credit card and build your credit

1. Secured credit cards – These cards require the applicant to pay a deposit up front. The credit limit is generally determined by the amount of the deposit. Other than the deposit, a secured card works the same way as any other credit card. Unlike a prepaid credit card, your card reports to credit bureaus, creating a credit history and score.
2. Get a co-signer – If you can get someone (preferably a parent or someone else with unconditional love for you) with good credit to co-sign for you will significantly increase your chances of being approved for the card. The drawback to this method is that any credit abuse on your part will reflect poorly on your co-signer’s credit score and s/he will be left on the hook for any of your unpaid bills. Be careful as you don’t want to drag someone else into your financial mess. This can be a sure-fire way to end a relationship (see: unconditional love).
3. Store cards – Department stores that issue their own credit cards usually have lower credit standards than cards with the Visa or MasterCard brands. If your goal is to build your credit make sure you pay your balance monthly, and watch out for high department store interest rates.

Finally, if your reason for getting a credit card is the convenience they offer, then consider a pre-paid credit card. Simply load the card with funds and it can be used anywhere credit cards are accepted or required. Prepaid cards do not report to credit bureaus, so they will not create a credit score for you, but the benefit is they do not require a credit check.