The big trap for the smart mouse. You thought you would be fine avoiding debts and credits since high school days. Now, welcome to this big game you got to play. No credit history is way more troublesome than going with a bad credit history.
It is always a question of trustworthiness when a financial institution grants you a loan or is issuing you a credit card. You show your creditworthiness through a blemish free credit report and a good score to get the new credit card or any other form of revolving credit line. It’s that simple.
But, what if you don't have a credit history till date? How to get your first credit card then. It seems like a stage of paradox. To get ‘A’ you must have ‘A’.
Truly, the only way to get a traditional credit card with a decent credit limit is to have a good credit score.
There's no way you can break the wall.
But there are a few cracks through which we can slide in.
Let’s have an elaborate discussion on how to get a credit card without credit history. Our first focus will be building a good credit report. Or if you have little credit history, then how to shoot it up.
Try 1: Take out a credit builder loan
You go to a credit union or a bank that offers credit builder loans.
A credit builder loan is a small amount loan, usually taken out to build a credit history or recuperate a bad credit report.
But there is a catch. You start paying for your loan but you can't have the loaned amount. The amount you borrow goes to a savings deposit account of the lender.
You lay your hands on that amount only after you are done with the full repayment of the loan.
If you are seeking this option, remember the lender has nothing to lose. The credit union or the bank offering this loan, has a full recovery option, if you don't repay them.
You, on the other hand, will bring a huge negative impact on your credit report as a start off, with delayed payments.
So sleep over it before taking out this loan.
Try 2: Co-sign a credit card
Become an authorised co-user of an existing credit card.
Your co-signer should be someone you trust and one who trusts you. It could be your parents, family members or trusted friends and acquaintances.
But you will have a situation down here. This is like a tie up venture.
You will obviously have your own credit report built up, but irregular payments from any side will affect both the account holder’s report.
This is technically an easy way of creating a fresh credit history for beginners. People usually co-sign with their parents or close family members.
Eventually both must start to maintain a good payment history.
After you are done with a good 6 months or 1 year credit report, you can then apply for your first credit card by showing your credit score.
Try 3: Create a rental history
Say goodbye to your home for a few months or a year.
Start living on rent. You will learn to take up responsibilities!
Moreover you will start to create a credit history.
How’s that??
Well you are paying your rent, that's one kind of a credit line after all.
Ask your owner to file your rental history to a credit union.
Regularly pay your bills to mark a good credit score so that you may go for your first credit card without any constriction.
Try 4: Get a secured credit card
We are all acquainted with security and back up.
This is a strategy that financial institutions play when people go for their first credit card with no existing credit report or score.
The banks will ask you to deposit a certain fund against your credit card. This is a collateral deposit, which will become your credit limit. Say if you deposit $1000, then your credit limit will be $1000 or a few percentage more, like $1100 or $1200.
With this card you start to activate your credit score from scratch.
After 1 or 2 years, when you have a striking score you return this card, take back your security deposit, and inquire for a traditional credit card.
Try 5:
You may also try out retail cards or store cards. These cards will help you to build a credit report, but you can only use them at selected stores.
Retail cards has offers and discounts.
They also give you cash back after using for a certain time.
There are series of retail cards in the market, choose wisely. You don’t want to fall a victim in the rigmarole of debts.
All the above methods are equally beneficial to building a new credit history or improving one’s bad or little credit history.
Now that you have learnt how to get a credit card without credit report or credit score no matter whatever state you are in, you must be clever at all the above methods. They are actually tricks you play to build your line of credit.
Don't play foul, play safe, have a good income , and never miss any payment.
Check out: Credit Score (FICO) basics - How to improve credit scores