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A complete guide to getting a credit card with no credit history
Having no credit history limits your credit card options, but we all have to start somewhere. Fortunately, many financial institutions offer cards designed specifically for people who have yet to start building their credit profile.
The best credit cards for no credit history offer more than the everyday convenience of cashless transactions. They also offer rewards, financial education resources, account management tools and a clear path to an improved credit score. But first, your credit-building journey begins with choosing the right credit card for yourself.
In this guide:
Bankrate’s top picks: Starter credit cards for no credit history
A closer look at top cards for no credit history
Petal® 2 “Cash Back, No Fees” Visa® Credit Card
Best card with a credit-building app
- This card is a good fit for: Consumers with no credit history, particularly those who make mobile apps a big part of their daily lives.
- This card is not a great choice for: Balance transfer seekers — There is currently no option to make a balance transfer.
- What makes this card unique? Using the Petal 2 Credit Card app, cardholders can plan a budget, stay updated on their credit scores and set up automatic payments to help them build a solid credit history. Also, the card’s cash back program rewards responsibility by increasing the rate from 1 percent to 1.5 percent after you make 12 on-time monthly payments.
- Is the Petal® 2 “Cash Back, No Fees” Visa® Credit Card worth it? The Petal 2 card’s Cash Score analysis means you don’t need a credit history to apply, and the lack of fees makes it an intriguing low-cost option. Young consumers who use apps for virtually everything will probably enjoy having credit-building at their fingertips.
Read our Petal® 2 “Cash Back, No Fees” Visa® Credit Card Review.
Discover it® Student Cash Back
Best for rotating cash back bonus categories
- This card is a good fit for: Students who like the incentive to work hard in the classroom. Every year you have a GPA of 3.0 or higher (for up to the next 5 years), you earn a $20 statement credit.
- This card is not a great choice for: Someone who might forget to enroll in the quarterly bonus categories or finds the rotating structure bothersome.
- What makes this card unique? Most cash back cards fit in the “set it and forget it” category, earning flat rates on eligible purchases year-round. With rotating bonus category cards like the Discover it Student Cash Back, you’ll need to be more of an active participant, remembering to activate the bonus categories each quarter.
- Is the Discover it® Student Cash Back worth it? 5 percent cash back on each quarter’s activated rotating categories (on up to $1,500 in purchases per quarter, then 1 percent) is pretty stellar. If you’re up for the challenge of keeping up with the bonus categories, your cash back earnings could be substantial.
Read our Discover it® Student Cash Back review.
Secured Mastercard® from Capital One
Best for accessing a higher credit line
- This card is a good fit for: Someone who wants a straightforward route to a better credit score and isn’t set on earning rewards.
- This card is not a great choice for: Someone who wants to earn cash back or refuses to pay a security deposit.
- What makes this card unique? This is one of the only secured cards that may reward you with a credit limit that’s higher than your initial deposit. With this card, you also have the option to pay the security deposit in installments over a 35-day period.
- Is the Secured Mastercard® from Capital One worth it? If you’re on a mission to build credit, this card is a great choice. With a security deposit that’s lower than most annual fees and automatic consideration for a higher credit line after six months with on-time monthly payments, the Secured Mastercard® from Capital One is an affordable and efficient credit-building tool.
Read our Secured Mastercard® from Capital One Review.
Discover it® Secured Credit Card
Best secured card with rewards
- This card is a good fit for: Someone who can put down a security deposit of as little as $200 and wants to earn cash back.
- This card is not a great choice for: Someone who doesn’t have a bank account, which is an approval requirement.
- What makes this card unique? If you don’t have a lengthy credit history, finding a rewards card can be tough. The Discover it® Secured Credit Card offers cash back in several everyday categories, and Discover will automatically match all of the cash back that you earned at the end of your first year — a pretty great bargain for a starter credit card.
- Is the Discover it® Secured Credit Card worth it? With a generous rewards structure, a security deposit as low as $200, and no annual fee, it’s easy to see why this is one of Bankrate’s highest-rated secured cards.
Read our Discover it® Secured Credit Card Review.
OpenSky® Secured Visa® Credit Card
Best for no required credit check
- This card is a good fit for: Someone looking to select their own credit limit, which will be equal to the amount you provide as a security deposit (from as low as $200).
- This card is not a great choice for: Those who want to steer clear of annual fees or earn cash back.
- What makes this card unique? Previous credit history or lack of credit history won’t be a barrier to obtaining the OpenSky Secured Visa Credit Card. You can qualify by making a fully refundable deposit with OpenSky into an FDIC-insured account.
- Is the OpenSky® Secured Visa® Credit Card worth it? The ability to decide your own credit limit based on the security deposit you provide may be helpful for some. However, the fact that you have to pay an annual fee on top of a security deposit detracts from the card’s overall value.
Read our OpenSky® Secured Visa® Credit Card Review.
Petal® 1 “No Annual Fee” Visa® Credit Card
Best for local cash back offers
- This card is a good fit for: Aspiring credit builders who are looking to earn cash rewards and avoid an annual fee.
- This card is not a great choice for: Someone who wants consistent cash back opportunities. The Petal Perks program only offers occasional cash back deals, which are valid with select merchants only.
- What makes this card unique? Petal 1 can calculate your credit limit and interest rate by using your banking history, which means that your credit history (or lack thereof) isn’t as important.
- Is the Petal® 1 “No Annual Fee” Visa® Credit Card worth it? This card’s flexible approval process, lack of annual fee and cash back deals make it a solid choice for credit beginners who are serious about improving their credit.
Read our Petal® 1 “No Annual Fee” Visa® Credit Card Review.
Self – Credit Builder Account + Secured Visa Credit Card
Best for building credit with savings
- This card is a good fit for: Someone who wants to build their savings alongside their credit history.
- This card is not a great choice for: Those looking for immediate access to a line of credit. You won’t receive the Secured Visa Credit Card until you’ve saved $100 in your Credit Builder Account and made three on-time monthly payments in a row.
- What makes this card unique? The combination of a savings account and a secured credit card is pretty unique, especially because neither requires a hard inquiry on your credit report.
- Is the Self – Credit Builder Account + Secured Visa® Credit Card worth it? The opportunity to get two lines of credit (the credit builder account, which is a loan, and a credit card) without a hard inquiry on your report is pretty unusual. If saving money is one of your goals and you’re fine to wait a few months for the credit card, the Self Visa is a good choice.
Read our Self — Credit Builder Account + Secured Visa® Credit Card review.
Deserve® EDU Mastercard for Students
Best overall student card
- This card is a good fit for: U.S. and international students who want to earn cash back.
- This card is not a great choice for: Someone who wants to maximize their cash back earnings. 1 percent cash back is a fair offer for a starter card, but you can find better.
- What makes this card unique? If you pay with your Deserve® EDU Mastercard for Students, you’ll get a one year reimbursement on an Amazon Prime Student membership after spending $500 in the first 3 billing cycles (lifetime value of $59), which is a great perk.
- Is the Deserve® EDU Mastercard for Students worth it? A card that allows you to build your credit in a manageable way while also earning generous rewards could help your journey into personal finance get off to a smooth start.
Read our Deserve® EDU Mastercard for Students Review.
Citi® Secured Mastercard®
Best for no monthly maintenance fee
- This card is a good fit for: Credit newcomers looking for a minimal-fee route to good credit.
- This card is not a great choice for: Rewards seekers.
- What makes this card unique? You’ll have free online access to your FICO Score at any time. The card offers automatic account alerts, auto pay, choice of payment due dates and identity theft protection, among other features. Cardholders can also take advantage of exclusive offers through Citi Entertainment®.
- Is the Citi® Secured Mastercard® worth it? This starter card may not come with rewards or a slew of perks, but you’ll avoid monthly maintenance fees and annual fees. If you practice good credit habits, Citi may refund your initial deposit and upgrade your card within the first 18 months. For a credit newcomer, the credit-building features can be well worth the lack of rewards.
Read our Citi® Secured Mastercard® review.
Why building a credit history is important
Your credit history, often called your credit report, is a record of your performance as a borrower and user of credit. A good credit history indicates that you’re a reliable and financially responsible person. Establishing a solid credit history will increase your chances of getting approved for loans and receiving better offers on interest rates.
Improving your credit score can help when:
- Applying for a loan
- Upgrading a credit card
- Searching for a house or an apartment
- Negotiating car insurance rates
- Requesting higher credit limits
- Looking for a job
Most credit card issuers report your spending habits and payment history to one of three major credit reporting agencies. These agencies compile this information with reports from other lenders such as your mortgage company or small loan lender to create your overall credit report and credit score.
Your credit history will probably have a large influence not only on your personal finances but also on other areas of your life. Used correctly, a credit card is one of the ways you can start building a solid credit foundation.
How to establish credit with no credit history
Your credit report is created when you open your first credit account, whether it’s a credit card, auto loan or some other type of credit. What happens next depends a lot on your actions and decisions.
Building a credit history takes time. Building a strong credit history takes both time and good financial habits. Keep these guidelines in mind as you think about establishing your credit history:
1. Check your credit report before getting started
Taking a look at your credit report is an essential step to give yourself an idea of where you stand. Even if you haven’t begun your journey yet, errors can appear on your credit report, so it’s best to check ahead of time to be sure you’re not wrongfully disadvantaged.
Luckily, this step is easy. Upon request, each of the three major credit bureaus will provide a free copy of your credit report once a year. You can go here to request a copy online. And if you do find anything that looks incorrect, you can dispute the errors to get them removed.
2. Apply for a credit card
Opening a credit card account is a major step on the road to building credit history, so take time to find the right credit card. Evaluate the key features, credit score requirements and any fees (annual fees, late payment fees and so on). Pay particular attention to the annual percentage rate (APR), which determines how much interest you would pay for carrying a balance.
A secured credit card that requires a deposit might be a viable option for someone with no credit history. You can build credit and qualify for a refund of your deposit after making consecutive on-time payments.
Before applying for any credit card, see if pre-qualified offers are available. A pre-qualified offer can give you an idea of your approval odds without initiating a hard credit check that can temporarily lower your credit score.
3. Practice good spending habits
Being a responsible user of credit shows the credit reporting bureaus and potential lenders that you’re low-risk, meaning they have little reason to worry about you not paying your bills or maxing out your credit.
Also, overspending with your card could affect your credit utilization, the ratio that measures how much credit you’re using in relation to how much credit you have available. In general, it’s best to keep this ratio at 30 percent or less. For example: If you have a card with a total credit limit of $1,000, aim to spend no more than $300 on the card in a billing cycle.
Online account management makes it easy to track your charges day to day without having to wait for a statement at the end of the month. Use your account’s dashboard to keep an eye on how much you’re using the card.
4. Pay your credit card bill on time and in full
Speaking of spending, making too many purchases with your credit card could also lead to big balances that are difficult to pay off in time. Late or missed payments never look good on your credit history. On the other hand, making it clear that you can consistently pay on time and in full will do wonders for your credit score.
A more immediate concern of missing payments is APR, which represents the cost of interest and other fees that would apply to any unpaid charges carried over from one billing cycle to the next. To avoid APR, pay off your entire balance by the due date whenever possible.
Some credit-building cards provide extra incentive by offering to raise your credit limit after you’ve made a certain number of consecutive on-time payments.
5. Keep the credit card account open
Length of credit history accounts for 15 percent of your credit score. A big part of determining your length of credit history is the average age of all your credit accounts. Even if you cancel a credit card with your account in good standing, which is a positive, the effect on someone with a limited credit history is pronounced.
When you close a credit account, such as a credit card, it also affects your credit utilization ratio. Having fewer accounts means you have less available credit.
To keep things simple, make your credit card payments on time and spend responsibly. Those good habits should help you avoid situations where you’re tempted to cancel a card abruptly, such as running up a large balance.
Why you might have more credit history than you think
So-called “thin-file” consumers who’ve never taken out a car loan or a mortgage tend to come up short under the traditional definitions of credit history. The good news is that newer credit-scoring models and payment-reporting services have the potential to benefit consumers who have good credit habits even if their traditional credit profiles are lacking.
Credit bureaus have traditionally focused on payment history, length of credit history, amounts owed, credit mix and new credit. Experian Boost and UltraFICO supplement that information by adding deposit accounts to the mix — checking, savings and money markets — and considering factors including:
- How long the accounts have been open
- The accounts’ level of activity
- Amounts in savings accounts
- Mobile wallet transactions such as PayPal and Venmo
Experian Boost also factors in payments for utilities, eligible streaming services and cellphone service. Services such as PayYourRent and RentTrack that report your rent payments to credit bureaus could also help you leverage a history of being a good tenant into a better credit score.
How long does it take to build a credit history?
Each case is situational, but those just beginning their credit-building history will need three to six months before a score can be calculated. It takes a bit of time after opening your first credit account to get a three-digit score, but this window is an opportunity to make a good start by spending responsibly and paying your bills on time.
Making on-time, in-full payments has a positive effect on the most important of several factors that determine your credit score. A solid payment history can help establish a solid credit score faster than expected, sometimes in less than half a year.
Bankrate Insight
Most lenders refer to the FICO Score or VantageScore methods when assessing credit scores. You may have no control over the method your credit issuer is using, but making timely, sufficient payments, maintaining a credit utilization of under 30 percent, keeping a variety of credit accounts and staying consistent will serve you well.
CardSmart: A new graduate’s first credit card
I received an email from someone who visited our site with questions about credit scores and rewards cards. Taylor is a recent college graduate planning to apply for her first credit card, and she wanted to know:
- Is FICO the most reliable measure of her credit score?
- Would checking her credit score actually hurt her credit score?
- Are travel cards better than cash back cards?
- Does she have the credit score to qualify for a travel card?
Here’s a summary of my answers:
Credit scores
My advice to Taylor was to make FICO her first choice, for reasons that involve market share more than reliability. FICO says that its credit scores are used in 90 percent of lending decisions, so chances are high that your FICO Score will play a prominent role when you apply for a credit card.
I also clarified that checking her credit score with FICO or any other credit scoring service is considered a “soft inquiry” rather than a “hard pull” and won’t affect her score.
What kind of card should she get?
Taylor is correct about a travel card potentially being harder to qualify for, especially for someone with limited credit history. Unless she travels a lot (as in several extended trips a year, with airfare and hotel stays), getting her money’s worth with a travel card could be tricky.
I also told her about my own experience with cash back rewards, which has been quite positive. My current card earns 3 percent cash back on gas, 2 percent on groceries and utilities, and 1 percent on other general purchases. Since I pay my monthly bill on time and in full like clockwork, I don’t have to worry about interest or late fees cutting into my rewards earnings.
For Taylor’s first credit card, I recommended a general-purpose card that can help her further establish her credit history. And if she qualifies for a card that also earns simple cash back rewards, that would be icing on the cake.
The takeaways
- Knowing your credit score before you apply for any kind of credit is essential. Many credit card issuers display a recommended credit score before you apply so that you can better estimate your chances of qualifying. Also, checking your credit score won’t do any damage.
- Your lifestyle and financial status affect what your ideal credit card will be. People with no credit history tend to be on the young side, just starting their financial journey. A cash back card would generally offer a better fit for a student or a young professional than a travel rewards card. (A young professional athlete making $10 million a year and planning a getaway to Fiji in the offseason might be a different story.)
But we can’t all be millionaires, which is part of the reason Bankrate is here to help you make well-informed financial decisions. If you have questions about credit cards, credit scores or personal finance in general, please email me at bbridges@bankrate.com.
Tips on applying for your first credit card
Making your first-ever credit card application doesn’t have to be intimidating. Consider a few guidelines that can help you prepare:
Requirements to get a credit card
- You must be at least 18 years old. You cannot be approved for your own credit card as a minor. Even at 18 – 20 years old, you will be asked to provide proof of independent income or to have a parent cosign on your application, as required by the Card Act of 2009.
- You must have an income source or access to an income source. Credit card applications will ask for your income. If you don’t have an independent source of income, you may list that of your parent or partner, as long as you have “reasonable expectation of access” to that money, like having a shared bank account. This is an amendment to the Card Act of 2009.
- You’ll usually need a Social Security Number or an Individual Taxpayer Identification Number. In most traditional cases, you will need to provide your Social Security Number on a credit card application; Discover, Synchrony Bank and Barclaycard require it. However, some issuers like Capital One and American Express may accept an Individual Taxpayer Identification Number in place of a SSN. An ITIN is a nine-digit number issued by the IRS to a tax-paying individual who lives in the U.S. and does not have a Social Security Number. Keep in mind that you may still be denied with an ITIN due to a lack of credit history within the U.S.
Bankrate Insight
If you don’t meet all of the requirements to get a credit card, one option is to become an
authorized user on a parent or guardian’s credit card. There is no age requirement to become an authorized user, and you’ll also be able to build credit.
Look for pre-qualified offers
Credit card issuers and other types of lenders can perform two kinds of credit checks when someone submits an application: a hard inquiry and a soft inquiry. A hard inquiry will temporarily lower your credit score while a soft inquiry has no effect.
Pre-qualified offers don’t require a hard inquiry, so keep an eye out for pre-qualification features like CardMatch™. You can get a better idea of which cards you might qualify for without taking a short-term hit on your credit score.
Be ready to submit some information
It’s routine for the card application process to require some basic information, even if you have no credit history. The issuer will need to verify your identity, which is why you’ll be asked for details such as your full name, date of birth, Social Security Number and address.
Depending on the type of card and the issuer, you might also need to provide your yearly income, monthly rent or mortgage payments and other information that offers insight into your current financial situation.
Limit the number of applications you make
Applying for multiple cards in a short period of time could signal to lenders that you want more credit than you can responsibly handle. Also, remember that credit applications involving a hard inquiry will lower your credit score temporarily. Be selective about which cards you apply for.
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