Can you get a credit card with no credit at all? For many people, this may seem like the equivalent of something coming from nothing. Well, this possibility is something to debate in theology or physics, but when it comes to credit cards, the answer is yes. It is possible to get a credit card without a credit history.
Unfortunately, this is where all the good news ends. Anyone just starting out with credit will often have the toughest of times getting approved for a new credit card. Credit card issuers view such people as a risk since they have no means to gauge their creditworthiness, including seeing how responsible they may be with their credit.
However, there is some better news: you can still Read on to discover your options—even if you have no credit history.
Can You Get a Credit Card with No Credit?
Yes, you can get a credit card with no credit history. Unfortunately, your card options may be limited, and your available options won’t offer the long list of perks you may find with most cards. Typically, you won’t have access to premium credit cards that run lucrative rewards programs. Even so, you can still use your starter card to work your way up to some solid credit.
Once you receive your first line of credit, it’s crucial that you use and maintain it responsibly. This includes making all monthly payments on time and keeping your revolving credit as low as possible. Once lenders see that you can use credit responsibly, they’ll conveniently extend more credit card options with more features and benefits.
What It Means to Have No Credit
Having no credit differs from having a bad credit score. A bad credit score is an indication that you’ve been irresponsible with credit usage in the past while having no credit means you’ve never had access to a line of credit, so lenders and credit card issuers have no form of financial activity to refer to. There’s no information on your credit reports, so lenders can’t assess your creditworthiness.
Remember that having no credit doesn’t automatically put your credit score to zero. This is quite an important distinction, since according to the major reporting bureaus, it’s impossible to have a credit score of zero. Having no credit simply means that you have no credit score.
Once you start using your new credit card, the credit reporting agencies will receive the information they need to calculate your credit score. A credit score is a three-digit number, usually between 300 and 900, designed to represent your credit risk or the likelihood that you’ll pay your bills on time. Your credit score and associated credit file may vary between the credit reporting agencies because of the different scoring models used, and not all creditors report to both agencies.
Preparing for Your First Credit Card
With no credit, you most certainly won’t secure offers from any credit card issuers. Even with limited options, you still need to prepare to improve your situation. Here’s how to get the momentum for your first credit card going.
Look at the income requirements
Most credit card issuers want to ensure you have sufficient income to repay your card balance, so they’ll often place a minimum income requirement for applicants. The income you declare on your credit card application must be yours. You can’t put the income of your parent, household member, or spouse to qualify for your first credit card unless you have reasonable access to their money.
Income limits will vary among credit card issuers, but you stand a higher chance of getting approved for a credit card if you have a higher income. All isn’t lost if you have no income, though. You can still get a secured credit card, which requires you to put down a security deposit as collateral.
Consider the annual percentage rate
The annual percentage rate (APR) is the amount you’ll pay each year for borrowing money on your credit card. While you’ll inadvertently want a 0% APR, you can expect a higher-than-average APR if you have no credit history. If you still don’t land an APR within the single-digit bracket, you can avoid the consequences of high interest rates by paying your balances in full each month.
Don’t ignore credit card fees
Unfortunately, your first credit card may not be free to use after all. Credit card issuers may charge an annual fee for using the card. Other types of fees you can expect your credit card to carry include balance transfer fees, late payment fees, ATM fees, and more. It’s a good idea to crunch the numbers based on your spending to determine whether it makes sense to take out a card with a different set of fees. For instance, if you’re a frequent international traveller, you’ll want to stay away from cards that charge foreign transaction fees.
Check the credit limit
Credit card issuers will set the maximum amount of money you can spend on a new credit card, and that’s your credit limit. In most cases, a high credit limit comes against the backdrop of a strong credit history, so you won’t get approved for a high limit if you’re still getting a footing into establishing your credit. It takes time to build your credit, but as you do, you’ll open up yourself to more rewarding cards and higher limits.
Some credit card issuers have an online screening or pre-qualification tool that lets you check whether there is a credit card that matches your credit profile. A pre-qualification won’t ding your credit score, but if you eventually complete your credit card application, the hard inquiry may show up on your credit report and potentially lower your credit score.
Remember that getting prequalified doesn’t guarantee approval outright. Factors like your income may cause an issuer to deny you a credit card for which you are prequalified. Your credit card issuer will provide its reasons for denying your application, so use this information to decide upon your next move.
Credit Cards You Can Apply For With No Credit
Here are the types of credit cards you’ll get approved for if you have no credit history to support your application.
Student credit cards
College students who don’t have sufficient income or a credit history can qualify for student credit cards. You’ll only be approved for a student credit card once you prove that you’re enrolled in a qualified university or college. You have numerous options within this category, so be sure to compare and narrow down your choices based on fees, interest rates, and rewards.
Credit card issuers are more forgiving of lower income and may let you use work study, grants, or scholarships as qualifying income.
Store credit cards
Retail store credit cards are much easier to qualify for than traditional cards if you have no credit. However, while store credit cards give you a better shot at jumpstarting your credit history, their use is generally limited to the specific store or group of stores that issue them. Retailers often use store cards to promote sales and build customer loyalty, so you’ll want to consider stores with great rewards programs.
Finally, don’t go all in, since store credit cards are often synonymous with high interest rates and low credit limits.
Secured credit cards
Secured credit cards are often the default go-to option for anyone who isn’t otherwise able to qualify. Here’s how they work: you deposit money into an account, which is sometimes called a security deposit, that your card issuer uses as collateral. In return, your card issuer will approve you for a card whose limit is equal to your security deposit. You may increase the credit limit by depositing more money when you first open the account.
There’s nothing wrong with applying for a secured card provided you choose one that reports your activity to the credit reporting agencies. Besides, many banks will let you convert a secured credit card to a conventional card after establishing a sufficient payment history.
Other Options for Establishing Credit
If you’re having trouble jumpstarting your credit on your own, a friend, spouse, or relative may want to help you establish your credit so that you’ll have an easier time opening a credit card in your name.
Apply with a cosigner
Another shot at getting your own card if you can’t qualify for any of the options above is applying with a cosigner. Usually, this will be someone with good credit. When someone cosigns for your credit card, it means that they have guaranteed to pay off your balances if you’re unable to do so yourself. A cosigner may help you get better terms than you’d have on your own.
Unfortunately, many people are wary about cosigning for a credit card because they’ll be on the hook for your debt if you can’t pay it off. What’s even worse is that their credit score will tank if they can’t pay off your debt. And since your finances are tied to someone else, you won’t enjoy much privacy since your cosigner will be watching your statements.
Nevertheless, the benefit of applying with a cosigner is that if you honour your payments, you’ll build your credit just as you would without a cosigner.
Become an authorized user
Your last possibility for establishing credit is by becoming an authorized user on another person’s account. In this case, their entire credit history is added to your credit file, which gives you a head start with an already established credit account. Once there’s a record of an active account on your credit report, it becomes easier to qualify for your own credit card.
A spouse, relative, or friend may add you as an authorized user on their account without the need for a credit check. This is generally less risky than cosigning since the owner can remove you from their account at any time.
Conclusion and Recommendations
While your lack of a credit history limits your options, you can still get a credit card with no credit. Remember, getting a credit card is just the tip of the iceberg. You must strive to use the credit card responsibly by maintaining a low balance and paying it in full each month. That way, you will establish and grow your credit as well as qualify for better cards in the future.
Don’t give up if you have no credit history. Check in with different lenders to see whether there are other ways to qualify for a credit card. Some lenders may consider the payment history from utility records, so don’t be afraid to ask. However, if your credit card application is rejected, avoid spamming card issuers with more applications. Instead, consider a secured credit card or a retail store credit card.
Frequently Asked Questions
At what age can I get a credit card in Canada?
You must have attained the legal age in your territory or province to get a credit card, which is usually 18 or 19 years.
How long does it take to get a credit card?
After submitting a credit card application, which you should be able to complete within minutes, you’ll receive an email response almost instantly. If you’re approved for a credit card, your issuer will send it to you via mail.
Will I be approved for a credit card if I’m unemployed?
You may still qualify for a credit card even if you’re unemployed. Your card issuer may accept other sources of household income, including your spouse’s wages, unemployment benefits, or income from investments.