Credit cards are often promoted as a quick and easy means of increasing or improving your credit score. But credit card companies typically want to see your credit score before issuing a card to you. So, how do you get a credit card without a credit history?
Whether you’re a young adult, a new U.S. resident, or an adult who simply doesn’t have a credit history because you’ve never used debt, getting that first credit card can be a challenge. Luckily, there are tips and hacks for getting a credit card without a credit history.
Choosing your first credit card as a beginner without a credit history
While there’s not an industry-wide standard, traditional credit cards typically require a credit score in the fair to good range. A score of 670 to 739 is generally considered to be a good credit score. The definition of a fair credit score typically goes as low as 580.[1]
The good news is that there are card payment options for those who are just starting out and have a score below 580.
Here are the a few starter credit card options.
Secured credit cards
With a secured credit card, you leave a deposit equal to the credit limit with the credit card company, then use the card and pay it off exactly like you would with a traditional credit card.
For example, if you leave a $200 deposit, you can get a credit card with a $200 limit. You can make purchases with the card, then repay the debt each month. Having a deposit on file protects the credit card company if you fail to repay the balance; they can take it from your deposit. But, ideally, they won’t need to touch the deposit, and it will be refunded to you once you “graduate” to a traditional credit card.
Not only are secured credit cards some of the easiest credit cards to get approved for, but they also help build your credit score as you use them. When you make your monthly payment toward the card’s balance, the payment gets logged by the credit bureaus and added to your credit history. On-time payments can improve your credit score over time.
Ideal for: Those who can afford to leave a few hundred dollars as a deposit to secure the card.
Student credit cards
Student credit cards operate just like traditional credit cards, but they’re limited to students who can prove they’re currently enrolled in an accredited vocational school, college, or university. To qualify for a student credit card, you typically need to prove that you have a reliable recurring income, like from a part-time job.
Student credit cards are designed to help young adults start building credit. They have lower credit limits than traditional credit cards (to help you avoid taking on more debt than you can repay). And they don’t usually charge an annual fee.[2] You might even find a student credit card with perks like cash-back on qualified purchases.
Ideal for: Students enrolled in an accredited post-secondary education program who have a documented source of reliable income.
Store credit cards
Store credit cards (also called retail credit cards) are cards issued by a retail brand. For example, The Gap card is designed to make it easier to shop at The Gap-owned brands like Banana Republic, Old Navy, and, of course, The Gap.
Because brands can set their own qualification requirements, they have some flexibility in offering cards to people without any credit history. Most brands still want to see some credit history before extending a credit line to a shopper, but there are outliers that will offer credit lines even without a credit check. For example, the NetFirst Platinum Card offers a $750 credit line for merchandise from The Horizon Outlet without a credit check. Importantly, this card does not report payments to the credit bureaus, so using it will not help improve your credit over time.
As a general rule, the credit score requirements are likely to be less strict if the card can only be used at that specific retailer and more strict if the card can be used outside of that retailer. For example, the Amazon Store Card can only be used on Amazon.com, but the Amazon Visa® Card can be used anywhere Visa® is accepted. So qualifying for the Amazon Visa® Card requires a higher credit score than the Amazon Store Card.[3]
Ideal for: Shoppers loyal to specific brands (while many retailers require at least some credit history, some retailers may offer credit cards for people with no credit history).
Prepaid debit cards
Prepaid debit cards are not credit cards, but they allow you to digitize your cash so you can shop online or in person with a payment card. With a prepaid card like the Netspend® Prepaid Card[OW1] , you simply load funds to the card itself, then use that card as you would use a credit card, and reload funds as needed.
So if you’re looking for the convenience of paying by card, but don’t have a bank account with a debit card or the credit history to qualify for a credit card, a prepaid card might be a good fit for you.
Prepaid debit cards are also a popular option for:
- Parents who want to give their teens some financial freedom without giving them access to a credit line or bank account.
- Employers who want to digitize petty cash for authorized employees (again, without giving those employees access to the business credit card or bank card).
- Travelers who don’t want to risk losing cash or having their primary credit/debit cards compromised while on the road.
Ideal for: Those who are more interested in digitizing their money than in building credit, and those who value the security, flexibility, and budget control of a prepaid card, regardless of how much credit they build.
How to apply for a credit card with no credit
Credit card applications are typically completed online, although applications for store credit cards are also commonly done in-store, at the register. While the exact process and requirements might vary from one credit card provider to the next, you’ll usually be asked for the following information:
- Proof of identity —You may need to provide a government-issued ID and/or your Social Security number to confirm that you are who you say you are.
- Contact information —You may need to provide a phone number, email address, and/or residential address. In some cases, you might need to verify your address by providing an active lease or a recent utility bill in your name.
- Income — Credit card companies want to know that you have money coming in that can be used to repay your card balance. The application may ask for your monthly or annual income amount. You might even need to provide documentation to prove how much you make (such as a paystub or W2 from your employer, court orders for child support or alimony income, or recent tax returns if you’re a freelancer or gig worker).
- Consent for a credit check — Even if you’ve disclosed that you don’t have any credit history, the credit card company may need to confirm this by pulling your credit report from one or more of the three credit bureaus (Equifax, Experian, and TransUnion).
Things to consider when applying for a credit card with no credit
In the process of getting a credit card with no credit history, there are a few items to pay close attention to.
Credit limits for first-time borrowers
The credit limit is the maximum balance you can carry on the card.
- For secured credit cards, the credit limit usually matches the deposit amount (the issuer might offer set amounts for you to choose from, such as $250, $500, or $750, for example).
- For student and store credit cards, the credit limit might depend on your income, with higher incomes getting higher credit limits.
- For prepaid debit cards, the balance depends on how much money you load to the card.
A “hard pull” vs. a “soft pull”
Credit card issuers often insist on running a credit check even if you’ve told them you don’t have any credit, so it’s important to understand the types of credit pulls and how they affect you.
A “hard pull” is an official credit inquiry. The lender gets to see your credit score and check your credit history. The inquiry itself is then noted on your credit report. Inquiries can actually temporarily reduce your credit score.[4] The idea behind the minor credit score hit is that you’re actively looking to take on more debt, so you might be slightly less creditworthy in the immediate future.
A “soft pull” is off the record.[4] It lets the lender get a peek at your credit score without accessing the full report. This helps them decide if you’re likelyto qualify (called pre-qualification). If you’re likely to qualify, you might want to proceed with the application and a hard credit pull. If you’re not likely to qualify, the soft pull has helped you avoid an unnecessary hard pull.
“Graduation” options
Secured credit cards and student credit cards often “graduate” to standard credit cards at a set point, as long as you make payments as scheduled.
For example, a secured credit card might automatically graduate to a standard credit card after six months of on-time payments. This would allow you to recover your deposit and continue using your card without keeping a deposit on file.
A student credit card might graduate to a standard card after a certain number of on-time payments, as income increases, or once you graduate from school. The graduation from the student card might come with an increased credit limit and/or additional perks, like rewards programs.
How usage will affect your future credit score
Beginner-friendly cards can affect your future credit score in different ways.
- Secured credit cards — Meant to help you build credit over time. The balance and payments are reported to the credit bureaus, so on-time payments can boost your credit score. Late payments, on the other hand, can harm your score.
- Student credit card — Balances and payments are also reported to the credit bureaus, so your payments can affect your future credit score positively or negatively, depending on whether you pay your credit card bills on time or late.
- Store credit cards — May or may not be reported to the credit bureaus. If your goal is to build good credit, make sure the card you choose is reported so that your on-time payments can boost your score over time.
- Prepaid cards — Use preloaded funds rather than borrowed funds, so their balances and payments are not reported to the credit bureaus.
How to grow your credit from scratch
It takes time to demonstrate that you use credit responsibly, repaying debts as scheduled, month after month. While the precise credit-building timeline varies, you can generally expect to spend one to six months establishing your credit score, plus three to six months to build up to a “fair” score.
Here is a simple five-step plan to help you efficiently grow your credit score from scratch:
- Get a starter card —Now that you know how to get a credit card with no credit history, get your first card and start using it gently and consistently. Use it for necessities rather than indulgences, and don’t spend more than you can afford to repay.
- Pay every bill on time — Late payments can hurt your credit score, so make sure every payment is made promptly.
- Keep your utilization rate low — Using only a small percentage of the credit available to you is generally more financially responsible than maxing out your cards. Keeping your balance below 30% of the available credit line can help your credit score.[5] For example, if you have a $500 credit line, keep the balance below $150.
- Request periodic credit limit increases —An increase in your credit limit can improve your credit score by showing that you can responsibly handle more credit. Plus, it can reduce your utilization ratio. If you have a $200 balance on a card with a $500 limit, you have a 40% utilization ratio, but if the limit increases to $600, your ratio improves to 33% automatically.
- Be patient, and don’t apply for too many new debts at once — It won’t happen overnight, but, over time, this steady strategy can improve your credit score. While using multiple secured credit cards can help grow your credit more quickly, be aware of the hard pulls on your credit to minimize the impact of inquiries.
Frequently asked questions (FAQs)
What credit limit can I get with no credit history?
Your credit limit depends on multiple factors, including the type of credit card you get, your income, and any deposit you leave for the card (in the case of secured credit cards). In general, credit limits are smaller for those without a credit history. You might start with a limit of just a few hundred dollars. However, you can ask for credit limit increases over time as you prove your creditworthiness.
How long does it take to build credit?
Time frames vary, but it generally takes at least one to six months to establish a credit history. Then, another three to six months of on-time debt payments to build up to a credit score considered “fair.” And it might take a full year, or even two years, of on-time payments to improve to a “good” score.
Can I get a credit card without a job?
While traditional credit cards require proof of income, secured credit cards and prepaid debit cards are available to those who are unemployed.
You can get a credit card with no credit history
Don’t let a lack of credit history keep you from getting a credit card. Beginner-friendly options like secured credit cards, student credit cards, certain store credit cards, and prepaid debit cards work well for first-time applicants with little or no credit.
The key is choosing a card that suits your needs and goals. A student credit card works well for enrolled students with steady income. A secured card works well for non-students focused on building credit. And prepaid cards appeal to a wide range of users, with or without a credit history, who value convenience, security, and budget control without any effect on credit.
Choose your new card and start building good financial habits today!
Additional resources:
1. https://www.experian.com/blogs/ask-experian/what-is-a-fair-credit-score/
2. https://www.nerdwallet.com/credit-cards/learn/choose-student-credit-card
3. https://finance.yahoo.com/news/amazon-prime-store-card-vs-211850169.html
4. https://www.experian.com/blogs/ask-experian/hard-inquiry-vs-soft-inquiry/
5. https://www.experian.com/blogs/ask-experian/credit-education/score-basics/credit-utilization-rate/
