Credit Cards for People with No Credit History or Limited Credit
For people with no credit or limited credit files, it can be difficult knowing where to start rebuilding or building a good credit history. The best way to get started is with a first time credit card. However, not every bank or credit card issuer offers products to those with no credit, which can make getting started a challenge.
Fortunately, you do have options, even if you have no credit history or limited credit.
Once you have a credit card, and you manage your account responsibly, you can use your credit card to improve your credit score over time. Plus, many banks also provide free credit monitoring tools, which can be extremely helpful throughout the process of building your credit history. Here are some of the best credit cards and options available for building if you have no credit history or a limited credit history.
Here are the best credit cards for people with no credit for 2020 recommended by our editors:
- Capital One Platinum card
- Capital One Quicksilver One card
- Chase Slate card
- Journey Student Rewards card by Capital One bank
Best Unsecured Starter Credit Cards
Many people with no credit think their only option for building credit is to pay a security deposit for a secured credit card until they have established enough credit for an unsecured card. However, there are banks which cater to higher-risk consumers, that provide high-risk consumers and those with no credit, with unsecured starter credit cards with no deposit.
Credit cards that are marketed for fair or average credit are also a good option. If you don’t have any credit established, you have better chances of approval with these types of cards. Many banks will also allow you to check if you are pre-qualified for a credit card without pulling your credit score.
One of the most common providers of unsecured options is Capital One, which is well-known for being more understanding of those starting out than other credit card issuers. The Platinum and QuickSilver credit cards are often the best options for building credit with an unsecured credit card. Other option is the Indigo® card.
Another credit card from Indigo brand - for Fair to Good credit owners this time.
Easy pre-qualification process with fast response
Less than perfect credit is okay
Online servicing available 24/7 at no additional cost
Unsecured credit card, no security deposit required
Account history is reported to the three major credit bureaus in the U.S.
Best Cash Back Credit Cards for No Credit
There are also credit cards for people with no credit that also come with rewards, which can help you get a little more out of your credit card. One of the most popular examples is the Capital One QuicksilverOne card which awards 1.5% cash back on all your purchases. This card also offers a 0% intro APR for 9 months on purchases and balance transfers as well as access to CreditWise for tracking and monitoring your credit. This card includes a $39 annual fee, but there are options available with no annual fee if you can forego a rewards program.
Best Student Credit Cards
Because college students are often the people who are starting out building their credit files, there are many student credit cards available to get you started. If you are under the age of 21, the Credit Card Act doesn’t allow you a credit card unless you have your own income or a co-signer older than the age of 21, who will co-sign (typically a parent). If you are a college student, you should consider getting started with one of the best student credit cards available.
This card offers a 0% intro APR on purchases for 6 months and a low intro balance transfer APR of 10.99% for 6 months. The intro APRs can help save you money if you need to make a large purchase right away or if you need to transfer a balance from a card with a higher APR. There is also no annual fee for this card. Further, you can earn 2% cash back on gas and dining purchases, which isn’t an option that is always available with student credit cards.
no annual fee
no credit needed
5% cashback on changing categories
double first year cashback
Like the chrome for Students card, the Discover it for Students, is a great option for building credit. It also provides the 0% intro APR on purchases for 6 months as well as the intro balance transfer APR of 10.99% for 6 months. The biggest difference between the two cards, is that this card awards as much as 5% cash back on categories that rotate each quarter. Both Discover it cards offer access to your FICO credit score, as well as an opportunity to build credit if you are just starting out.
The Capital One Journey Student Rewards card also comes with a rewards program. You can earn a flat rate of 1% cash back, which can be boosted to 1.25% cash back if you pay your bill on time. This is a good opportunity to learn about and practice managing your account responsibly, while you earn cash back. Like other Capital One credit cards, this card also includes access to its Credit Wise credit tracking tool, which can help you maintain a positive dynamic in building your credit score.
You can read more about credit cards for students here.
Best 0% APR Cards for No Credit
It’s important with any type of credit card that you pay your balances in full each month in order to avoid paying the high amount of interest that you could be charged when starting out. If you aren’t able to pay in full every month, you should instead consider a card with a low interest rate, even if it means you won’t earn any rewards.
Many cards offer 0% intro APRs for purchases and/or balance transfers, which can help you to save a considerable amount of money on interest, in addition to providing low-interest rate options. If you prefer a 0% APR card to start out with, you should consider a card like Chase Slate, which offers a 0% intro APR on balance transfers and purchases for 15 months. Plus, you can take advantage of no balance transfer fee if you transfer within the first 60 days of opening the account. After that, the balance transfer fee will be the lesser of 3% or $5. This card has no annual fee and offers free FICO credit score monitoring.
Store Cards for No Credit
Another option if you have no credit or limited credit, is to start out with a store credit card. These are often available for people with lower credit scores, and allow you to build credit while you shop with your favorite retailers. This is a positive side effect of the agreement between a bank and a store to approve customers with lower than usual credit scores. Many store credit cards are issued by just a couple banks such as Comenity Bank, one of the primary issuers of store credit cards.
Although some store credit cards (mainly instant approval cards) can only be used in that particular store, there are store cards with the Visa, MasterCard, or American Express logos, which allow you to use the card anywhere that type of card is accepted, in addition to the specific store.
You can read more about store credit cards in this listing.
Best Secured Credit Cards
For people with limited credit, one of the best and easiest ways to get started building is with a secured credit card. These cards look and act as regular credit cards, but instead require a security deposit that is held as collateral in case you default on your account. Secured credit cards often carry higher fees and higher APRs, making them more expensive to carry, but they can help be especially helpful in building your credit.
Note for Choosing the Best Secured Card
The most important feature in a secured card is whether it reports to the credit bureaus. If not, then the card isn’t going to help you build your credit history. This is one of the reasons that prepaid cards are not helpful in building or rebuilding credit. Another feature to consider is the grace period and whether or not you can avoid paying interest on your purchases by paying your balance in full within your grace period. It is often best to pay your balance in full each month and maintain a low debt to credit limit ratio in order to grow your credit score as fast as possible.
Here are all secured cards in our editorial listing.
Prepaid Cards for Building Credit
Although prepaid cards are generally useless for building credit because they don’t report to credit bureaus, they are some of the easiest cards to be approved for if you don’t have credit. Further, there are prepaid cards such as the AccountNow Prepaid card, which reports your credit management to the credit bureaus and can help you build your credit history.
Other Options for Building Credit
Another option for building credit is asking your bank or credit union if they offer credit builder loans that are similar to secured credit cards to help build your credit history. These loans are typically a small one-year loan with a security deposit, which helps you build your credit in combination with a credit card. This helps you improve your credit mix and build your credit.
Other guidelines for building credit when you don’t have credit include the following.
- Do not submit too many applications in a short period of time.
- Monitor your credit score and credit reports.
- Do not overspend. Try not to use more than 30% of your total available credit.
- Do not carry balances.
- Use cards for credit-building, not as a source of credit for spending.
- Pay your bill two to three days before the due date every month.
Cards to Avoid When Building Credit
Unfortunately, there are financial products and credit cards available that aren’t always helpful in building your credit. These types of cards can carry extremely high fees and high interest rates, and in the end, can cause more damage to your credit score than they help. Having no credit history is a temporary problem and people with limited credit history are in a better situation than those with bad credit.
Some of the secured credit cards are marketed as first-time credit cards but aren’t recommended for this situation because of the higher fees and the inconvenient security deposit. Some of the cards to avoid include the First Progress Platinum Prestige Secured MasterCard and Horizon Gold. If you are building credit, there are many other options available.
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