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Getting a Credit Card with No or Bad Credit History

Author: Tracy Scott


How to Get a Credit Card with No Credit History

If a lack of credit history or a poor credit history is standing between you and a credit card, it may seem like an insurmountable obstacle to overcome. It’s difficult to get a credit card without some history of using credit, but using a credit card is one of the primary ways to build a credit history.

Here’s the good news. There are ways to build a credit history without possessing a major credit card. And once you’ve built a history—assuming it’s positive and demonstrates that you know how to use credit responsibly—you will become a much more attractive prospect to credit card issuers and other potential lenders.

Here are four suggestions to help you build a credit history.


1. Apply for a Secured Credit Card

Unlike traditional unsecured credit cards, which require no collateral, a secured credit card requires a monetary deposit that "secures" the card. The amount of this security deposit typically equals the credit limit of the secured card. For example, if your credit limit on the card is $500, then your deposit would most likely be $500.

The deposit is not used to pay for your purchases; it is only there to protect the card issuer should you fail to make the required payments on the credit card. It is up to you to make consistent, on-time payments on the purchases you made with the credit card, which is one of the primary reasons to have a secured credit card. It is those regular, on-time payments that will help you build a credit history. If you fail to make your payments, and the card issuer has to dip into your security deposit to get their money, well, that defeats the whole purpose of using a secured card to build credit. So make at least the minimum payment on a secured credit card on time, every time.

Other than the security deposit, a secured credit card works the same way an unsecured credit card does. You can only make purchases up to the designated credit limit, you must repay what you borrow, and the card issuer should report your activity on the account to the three major credit reporting agencies. Most secured credit cards are indistinguishable from unsecured cards, so no one should be able to discern which type of card you have just by looking at it.

Once you’ve demonstrated an ability to effectively use and manage a secured credit card—typically after a solid year of on-time payments—your credit card issuer may offer to graduate you up to one of their unsecured credit cards. Or, you may want to look into upgrading with your current card issuer or applying for an unsecured card with another credit card company.


2. Apply for a Retail Store Credit Card

Retail credit cards are unsecured credit cards. But the good news is that the approval requirements typically aren't as stringent as with major credit cards, so you may be able to qualify for one even if your credit history is less than stellar.

Retail store credit cards can usually only be used at the store or chain that issued the credit card, and credit limits are typically lower than with major credit cards. But it is precisely these lower credit lines and the fact that store credit cards have less functionality than major credit cards that tend to make them easier to get than, say, a Visa® or Mastercard®.

Just like with any credit card, your activity on the account should be reported to the credit bureaus and appear in your credit reports. So, if you’re using a store credit card as a stepping stone to a major credit card, it’s imperative that you use the card responsibly and make consistent, on-time payments to build a positive credit history.


3. Become an Authorized User

It is possible to build a credit history without even applying for a credit card of your own. By becoming an authorized user on someone else’s credit card, you may be able to build a positive credit history you can use to eventually get a credit card of your own. This is because many credit card issuers report activity on the account to the credit bureaus for both the primary account holder and the authorized user.

So, if the primary account holder makes consistent, on-time payments on the account, and activity is reported to the credit bureaus for both parties, you could build a positive history just by being associated with that account. But—and this is a big but—if you become an authorized user on somebody’s credit card, and that person makes late payments or lets the account get past due, this negative information could also appear on your credit reports and actually harm your credit instead of giving it a boost. So, if you’re considering becoming an authorized user, make sure the primary account holder uses the account responsibly, which means paying on time, every time.

The primary account holder can add you as an authorized user on their account by making the request via the credit card company's website or by calling the credit card’s customer service center. Once a card is issued in your name, you can make purchases with the card as if it was your account. If you’re becoming an authorized user on someone’s account to build a credit history, make sure the card issuer will be reporting account activity so it appears in your credit reports as well, because not all credit card issuers do so. Credit One Bank, for example, only reports account activity for an authorized user if the authorized user is the primary account holder’s spouse.


4. Get a Credit-Builder Loan

This different type of loan is designed strictly, as the name suggests, to help you build credit by giving you the opportunity to make consistent, on-time payments on the loan. Unlike a traditional installment loan, where you apply for the loan, get the money up front, and then make payments, with a credit-builder loan, you apply for the loan, make payments, and then get the money once you’ve paid the loan balance in full.

“How is that a loan,” you may ask, “if you’re basically giving the lender the money before the lender ever ‘lends’ it to you?”

It’s only a loan in the sense that it is helping you build credit, because the lender reports your payments to the credit bureaus. If you make regular, on-time payments on one of these loans, by the time you’ve paid it in full, you should have a positive payment history that could help you get a traditional installment loan or an unsecured credit card. On the other hand, if you miss or make late payments on one of these loans, you’re needlessly tying up your money and defeating the whole point of the loan. So, again, make sure you pay on time, every time.


Should one of these methods eventually score you an unsecured credit card, the secret to keeping that card and opening doors for additional credit down the road is really no secret at all. Yes, you guessed it: Make at least the minimum payment on that credit card on time, every time.

Want to see if you Pre-Qualify for a Credit One Bank credit card? It takes less than a minute and won’t harm your credit score.

About the author:

Tracy Scott

Tracy Scott is a freelance writer who specializes in personal finance and higher education. As a contributor for Credit One Bank, she has combined her expertise in these two areas and managing credit to create informative, engaging content for readers. Her reading list always includes a seemingly odd mix of financial literacy articles and sweet romance novels. She holds a BA in Psychology from the University of Texas at Austin and has a background in higher education regulatory compliance.

This material is for informational purposes only and is not intended to replace the advice of a qualified tax advisor, attorney or financial advisor. Readers should consult with their own tax advisor, attorney or financial advisor with regard to their personal situations.