Q: I’m an adult but have never had a need to use credit. I paid for my car in full and use cash, checks and debit to pay for everything. Someday I would like to buy a place and know I need to build up my credit score to do that. What are the best unsecured credit cards for people with no credit history such as myself?
A: There are many Americans that find themselves in the exact same situation. I would first like to say that you’re actually not in that of a bad position – having no credit history is like having a blank slate. No credit history is dramatically better than having a blemished credit record! Since you have an untarnished credit history it usually is significantly easier to establish a positive pattern of credit behavior vs. someone that is attempting to repair their credit.
So that brings us to the question, what is the best credit card for people with absolutely zero credit history or a somewhat limited history? Below are two recommended options…
Remember your choices will be limited starting out. Regardless of which bank or card issuer you choose you can expect the following:
Annual fee: Regardless of whether you get an unsecured or secured credit card, some financial institutions may charge you an annual fee. However, after you’ve managed your account responsibly for 9 to 12 months, then you will have the minimum amount of a history established for issuers to consier and you can try to apply for an unsecured card with no annual fee from a different bank. Although you might be paying an annual fee, you don’t have to stick with that card forever. As your credit score grows, more and more card options will open up to you.
Low starting credit limit: Since you are just starting out, you shouldn’t be surprised that your credit limit will be modest starting out – perhaps something between $300 and $750 if you’re approved for an unsecured card. However if you go with a secured card (that means putting up a security deposit with the issuer) you can likely get a limit that’s higher – usually a credit line that matches the amount of your security deposit.
Below are a few different ways you can get started:
Getting a card through your bank or credit union
Do you have a longstanding relationship with a bank or credit union? For example, is there a bank that you’ve had a checking and/or savings account with for a while now? If so, this can be a great place to get your first credit card since they already know you. It’s best to do this in person – walk in and meet with a personal banker there. Explain your situation and that you have no credit history and want to get your first credit card.
When going this route, many times your chances for approval of a card (albeit a basic one) will be better, because you have an existing account relationship with that bank. Another benefit is that secured cards can involve higher fees, so it’s better to get an unsecured card if possible.
Getting a card online geared towards those with no credit history
There are a number of financial institutions that specialize in credit cards for people with no credit history and those that need to repair their credit history. The best companies charge reasonable fees for these types of cards.
However, be aware… there are many banks and finance companies out there that will be more than willing to take advantage of your lack of experience and diminished options. One such example is First Premier Bank, who is famous for charging a myriad of fees (application fees, processing fees, monthly fees, etc). When combined, those might equal up to $100 or higher just during your first year. To add insult to injury, the credit limits they give can be as low as $300.
Which banks give consumers a fair shake?
Capital One® cards consistently get the best reviews from those starting out. Cap One is one of the largest credit card issuers in the nation and they have long made products available to the part of the market that needs of those with new credit or slightly impaired (fair) credit. They have this tool that you can use that tells you which offer(s) you might be pre-qualifed for:
This post was written or last updated June 9, 2014