How To Get Your First Credit Card With No Credit History?

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S3S
 
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How To Get Your First Credit Card With No Credit History?

Postby S3S » Fri Sep 27, 2013 12:35 am

What is the secret to getting approved for a credit card when you don't have any history of credit whatsoever? I have always used debit cards and honestly would be fine with using them forever, but came to the realization that if I am ever to finance a car purchase or buy a home someday, then I need to work on building my credit.

I have heard secured cards are a good way to build credit but from what I understand and have read about them, those require a security deposit (like $500 deposit for a $500 credit limit). If you do that then you can get approved even without a history from what I have heard. I suppose that's one option but having to part with my money like that isn't my first choice, if I can help it.

But what would be better is starting out with a normal credit card that does not need a deposit. Are there any cards for people to begin with, that might approve someone who doesn't have a credit history?


ivotedale
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Postby ivotedale » Fri Sep 27, 2013 1:23 am

Quite honestly I think your best choices are either a secured card (deposit, yeah I know) or the Capital 1 route.

Capital 1 isn't as bad as they were two, three, five years ago in my opinion- and although mine isn't really used anymore, it was a great stepping stone card if you will. 6+ months down the road, I had enough good credit to get on the Amex Zync world, Chase Freedom Visa, and now an Amex Blue Sky revolver card. Have never carried a balance nor intend to, and I want to think that's the main reason I have a 770+ score today w/ 5+ years of credit.

Just takes time my friend- whether that's through Cap1 (or similar "low end" card) or a secure card. You can find a multitude of other related information on new credit here throughout the forum, but we all have to start somewhere. On rare occasions you might hear of someone starting off w/ a great rewards card like the Chase Freedom, or other Amex charge cards, but those aren't as common starting out.

You will learn later on to appreciate the other benefits that come with credit cards, not just w/ building credit for car purchase/homes/mortgages/etc, but 'littler' things like purchase protection, travel protection if you intend to fly/etc, and other perks. Extended warranty by American Express is cool- I just bought a Western Digital Black Caviar external hard drive w/ a 5 year manufacturer's warranty, but will get an additional (1) year warranty just because I charged the total amount to the Amex. Meaning if it dies after the 5th year, I should be eligible for a replacement/money back guarantee regardless. Peace of mind.

Either way, best of luck w/ your decision- better sooner than later, and do it right!
Currently: American Express Blue Sky, American Express Zync, Chase Freedom Visa, Capital One Newcomers--->converted to Capital One Quicksilver Mastercard NO AF

beef.stu
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Postby beef.stu » Fri Sep 27, 2013 1:27 am

Myself as well as many of my friends got our first credit cards through the bank that we had checking/savings accounts with. I would suggest that route if possible.

Another option, if you are a student, would be to apply for a student card which will be more accepting of a shorter credit history. If that fails, then a secured card would probably be the next best option.
(01/10) - Wells Fargo VISA Platinum
(05/10) - Techron Advantage
(10/12) - Amex BCE
(02/13) - Chase Freedom VISA
(09/13) - Discover It
(03/14) - Sallie Mae WMC
(09/15) - Citi Double Cash WEMC
(09/16) - US Bank Cash+ VISA Signature
(01/17) - Amazon Prime Rewards Visa Signature

Mrm-na
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Postby Mrm-na » Fri Sep 27, 2013 10:07 am

I was late getting a credit card. I finally applied in response to a mail offer from Capital One. It was an easy instant approval, but that was back around 2007/08. At that point I doubt there was anything of significance on my credit report. I didn't have any loans or anything, but they gave me a chance and it worked out.
It was a basic unsecured "Platinum" card with a $39 annual fee and a $300 limit, which later was raised to $500 and stayed there ever since (they're known for usually not growing beyond that point). I never had to get a secured card.

I expect more regulations have forced banks to be more pedantic today than they were in 07/08, even for innocuous $300 credit cards. But an unsecured CapOne is still what I'd be tempted to try for. They're fine for what they're supposed to be. I've never had any problem with them, but I've never had any reason to call them and don't have any special expectations. I only expect them to charge my purchases, take my money, and report me to the bureaus, and they do that.
As long as you have nothing negative on your report, and can claim some kind of income, I'd think you'd be worth the risk of $300. But that's just me trying to be rational - I don't know what goes on in the mind of banks. Reading all the approval/disapproval stories on the internet can drive you crazy if you try to find any consistency in it.

Getting credit from your own bank or credit union is also a good idea. I've never tried it but that might be the easiest route if you have a strong history with them.

Later I got an invite for a card from Merrick - a low end creditor. The Merrick has no annual fee but the interest is higher. The nice thing is they let you see a monthly TransUnion FICO 08 Bankcard score. They also raised my limit much higher than CapOne, which I'm sure helped my score. Unfortunately I think their cards are invitation-only for some reason. If you do happen to get an invite, I'd take it for the benefit of the FICO score, but there's no future with them.

I went for years without truly caring about credit. I didn't understand any of what gets factored into a credit score. I never looked at my scores, or learned how any of that stuff works until just recently. I paid my bills but I was ignorant of what you need to do to impress banks. You have to read their minds. Abiding by the agreed terms isn't good enough, they have unwritten expectations like not actually using the credit limit they've given you. Reading on forums like this one was educational.
A look at Merrick's historical FICO graph shows that my score was stuck in the high 600s before I dropped my reported utilization. In the space of 2 months it rose to 784, with just those 2 lame cards. I was stunned to see that honestly.

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Postby Midori » Fri Sep 27, 2013 2:21 pm

S3S wrote:I suppose that's one option but having to part with my money like that isn't my first choice, if I can help it.


Don't think of it as parting with your money-- think of it as sticking it in a drawer for a period of time, and by sticking it in a drawer, you're able to establish your history and get further down the path of what you really want: prime cards, not being turned down for financing, getting good terms on your mortgage, not being told "no", etc, etc, etc. I rather wish I had known about secured cards that convert to unsecured cards after x period of time when I was shopping for a starter card... now I'm stuck with a card with an annual fee that I outgrew after about 6 months, but kept because the bonus rewards registered at the one-year mark. :o)

There's a remarkable lack of cards that grow with people. Wouldn't you think it would be better to park your money, pick up a secured card that graduates to an unsecured card and returns your deposit to you (or just close it out and get your money back) and use that as a stepping stone to qualify for superior rewards cards? Or is it better to try your hand at a "normal" card, probably with an annual fee, that you probably won't have a need for 6 months/1 year/2 years down the road?

DoingHomework
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Postby DoingHomework » Fri Sep 27, 2013 5:45 pm

Midori wrote:Don't think of it as parting with your money-- think of it as sticking it in a drawer for a period of time, and by sticking it in a drawer, you're able to establish your history and get further down the path of what you really want: prime cards, not being turned down for financing, getting good terms on your mortgage, not being told "no", etc, etc, etc.


I completely agree. You should never ever spend money on a card unless you have the cash to pay it off. If you can't afford to have $500 in a bank account to secure your card spending then you should not even have a card. Many years ago one could make an argument that you were losing out on interest. But these days savings accounts pay next to nothing so that security deposit is costing you less per year than you spend on coffee or snacks every week.

S3S
 
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Postby S3S » Sat Sep 28, 2013 12:13 am

Wow I am SO GLAD I joined this forum and asked this question. All of you, every one of your responses, has a load of useful advice.

ivotedale & mrm-na - If you guys got unsecured Capital One cards with little to no history, to you think I have a chance at getting my first credit card from them in an unsecured version?

beefstu - The problem is my bank is Chase and from everything I have read on here they are not the best credit cards for people with no credit history. The impression I get is that they are almost on the same level as American Express.

midori & doinghomework - I can see the logic in that. Probably everyone and their mom says this but I really am not planning on using my card to get into debt. As I said I would be cool with using my debit forever. Really it's like the way I look at it is I need a credit card that I will for the most part use as a monthly debit card since every month I will pay it off all of it.

ivotedale
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Postby ivotedale » Sun Sep 29, 2013 12:22 am

S3S wrote:ivotedale & mrm-na - If you guys got unsecured Capital One cards with little to no history, to you think I have a chance at getting my first credit card from them in an unsecured version?


I'm pretty sure anyone who is alive can get an unsecured version of a Capital 1 card...you may not be able to get the Venture 1 card right off the bat, but I ended up getting a basic, no-frills 1% cashback card. Easy, and got me into the credit game. As I mentioned, 6 months later you'll be seeing "pre-approved" letters for cards of other companies at your door (don't fall for the pre-approved game). I ended up w/ a no pre-set limit Amex Zync charge card months down the road because of my conscient spending.
Currently: American Express Blue Sky, American Express Zync, Chase Freedom Visa, Capital One Newcomers--->converted to Capital One Quicksilver Mastercard NO AF

dogblood
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Postby dogblood » Sun Sep 29, 2013 11:50 am

I suggest reaching out to DCU (Digital Credit Union) - an online institution based out of Boston.

I move the the US and my credit history did not move with me unfotunately (8 weeks ago).

DCU set me up with an unsecured card with absolutely no credit history - I mean no score nothing. With a nice credit limit too.

Definitely worth giving them a call - the app was painless and I am quite confident as long as you have a stable job/income and an address they can get you a card.



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