How to Get a Visa or Mastercard With No Credit History
Not everyone has a credit history. Establishing a good credit record is increasingly important as you wish to make major purchases in the future. Your credit rating will dictate the types of rates and fees you may be required to pay on purchases such as homes, appliances and cars. Your ability to obtain a new job, an affordable insurance policy and/or an apartment also rests on your credit score and history.
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Instructions
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Building a Credit History
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1
Establish a student credit card account for young adults. Set a fixed minimum balance available with the credit card company. Freeze this limit so that the credit company cannot automatically raise the limit. Explain to your student the importance of making payments and not exceeding your credit limit. For information on student credit cards see Resources.
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2
Find a cosigner for your credit card account. A cosigner with good established credit can establish a new credit account with an individual with no credit history. The cosigner is agreeing to assume responsibility for the payments if the primary account holder does not make their payments. Once the account has been established and is in good standing, the cosigner can be removed from the account or another account can be opened without a cosigner.
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3
Find a prepaid credit card to begin establishing your credit record. This type of card can only be used up to the amount of cash on deposit in the credit card account. Some cards allow payroll checks to be directly deposited into these cards. Once the card has been loaded with funds, individuals can purchase items, get cash or pay utility/home bills with the card. You cannot go over the limit. A prepaid card can only positively impact your credit score. For more information see References.
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Open up a checking or savings account in your name. With this new account, obtain a debit card. Responsible financial management of checking and savings accounts will assist you in obtaining a credit card.
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Begin a new credit card at your primary banking institutions. Many banks have their own credit cards for their customers. Your bank has a record of how you have managed your checking and savings account. They may be more open to establishing a credit card account with an established customer.
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6
Complete a credit card application with a major credit card company. Request a small credit balance. Major credit card companies are more likely to extend a $2,000 credit balance to an individual with no credit history than a $20,000 balance. Once you have proven your ability to manage credit wisely, request a higher credit limit.
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7
Establish a credit card at a retail store. Most of these stores readily grant credit cards with small balances, even as little as $200, to encourage loyalty to the store. Maintaining responsible use of this card will assist your credit score and your ability to obtain additional credit in the future.
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Tips & Warnings
To establish a good credit score, keep your credit card balance at or below 30 percent of your total available credit card balance on each credit card you own. Believe it or not, having three accounts with a limit of $9,000 and a balance of $3,000 on each card is more favorable than having one card that is maxed out at its total available credit of $9,000. Even though your total credit used in each scenario is $9,000, spreading out this amount among three cards shows that you are not overspending and are responsibly not using all credit available to you. Your credit score is made up of: payment history (35%); total amount owed (30%); Length of established credit (15%); New credit accounts (10%); Types of credit utilized (10%) Keep at least one credit card account open over the long term, even if you rarely use it. The length of credit history also positively effects your credit score. Maintain a card with one major credit card company and one retailer. This will increase your credit score if you are in good standing with both types of credit cards.
Only spend within your means. Using credit not only pushes your bills off for later, you will be paying much more for an item in the long term if your credit is not immediately paid off. Check all terms of your new credit card. Understand all fees and late charges. Also understand the amount the interest rate can increase. For information on selecting a new credit card see Reference three.
References
Resources
- Photo Credit morguefile.com
