Having a credit card helped me establishing my credit when I first landed in the US in 2005. I started from no credit to 800+ FICO score in 7 years. Having 4 credit cards (starting with a secured credit card from BofA) and one car loan helped me reach there, along with on-time full balance payment throughout. So, credit cards help in increasing credit score.
In this article point the how you can secure a credit card to better your score. While reading this, do keep in mind that credit cards are fool’s poison. A wrong use can ruin your life. Especially if you have had problems paying credit card dues, I’d advise you not to use credit cards again. Else, continue with the article and I’d help you securing a credit card even if you now have a bad credit.
A mere 10% of world’s trade is done via plastic. Rest 90% of trade happens over cash, check and money transfer. You can survive without a credit card. But, what about building a good credit score, either from scratch or from a bad one? You’ll need some form of credit to better your credit worthiness.
There are other good things with credit cards, like cash back points, ease of payment and not having a carry a fat wallet wherever you go.
(Related – When Should I Use A Credit Card?)
Everybody knows that getting approved for a credit card for a person with no credit is the most difficult thing to do. This is mainly due to not having a credit score yet and won’t have one until an active account is there on your credit report and that too for a minimum of six months.
Some credit card issuers realize that people have trouble getting a credit card for the first time and they’ve made credit cards specifically for people with no credit.
Factors that can get you the card
Job is a must
The most important factor in achieving this goal is to have a job. You must have a sufficient income to repay the balance accruing on your credit card, exclusively for underage cardholders.
While filling out the form for credit card application, the income put on should be of customer’s own not of his parents, spouse or family income. The access to that money would be of an added advantage but never bank on transfer payments as they never last long.
Credit card needs a pre-qualification
There are major credit card issuers in the country that have online pre-qualification that allows one to have a look at the options available for a specific credit profile. These pre-qualifications are basically the soft credit checks and they never hurt the credit score of the individual or show up on a person’s credit report when it is checked by somebody else checks the credit report.
On the contrary, if a person follows the usual procedure of credit card application, this will end up in the credit report and eventually there is a chance of credit score going into a decline.
One need to understand that it is not absolutely guaranteed that pre-qualifying would approve your credit card. But there are some other factors that could get you in trouble and you’ll end up losing the opportunity for which you pre-qualified and the most important out of the lot is your income. As a result, a letter in your mailbox will signify to you the specific reason for which you were denied.
Store Credit Card
People with no credit can apply for retail store credit cards as they get approved quite easily. Cards having no brand such as MasterCard or Visa are more likely to get approved. But one thing needs to be kept in mind that these cards have very low credit limits and high interest rates. So make sure your balance is low and pay it off timely to avoid high interest.
Secured Credit card
Those who can’t get approved for a more traditional credit card could opt for Secured credit cards. But make sure to pick the right one which that has a low charge it also submits it reports to the major credit bureaus of the country.
There is a credit limit to a secured credit card which comes from a security deposit that the customer makes which makes it different from all the other credit cards.
You need to pick the right one that offers a low fee because there are some credit cards that contain hefty charges piling up so much. Try and save for a few months for your security deposit or you can pick a credit card with a minimum security deposit let say a Capital One credit card having a minimum security deposit of $49.
I started my journey with a Bank of America secured card. First I had a $250 limit, then after 2 months I asked and raised it to $500. Then 3 months after that, I went to ask for a further increase and they offered me a credit card instead. so, I had my first real credit card within 6 months of reaching here. I still use the card at least once per quarter.
Student credit card
A student may qualify for a credit card, but should you try for one? Not before you read the good, bad and ugly of student credit card. Students having low or absolutely no credit history can have these credit cards. But again be careful in choosing which card to use since some of them have high-interest rates and lots of fees.
How about a Co-signer?
There is an opportunity for those who aren’t able to get a credit card on their own to take advantage of somebody else’s good credit. A person with a job and good credit would be of immense help to you in getting a credit card, but it has some drawbacks too.
Your finances would be exposed to that person and there is a possibility that both of them exploit each other and the person with a good credit is more at risk. Nobody likes to accountable to somebody else but in this regard, there will be one.
Co-signing a credit card with your parent or a spouse or even siblings has not gained that popularity since people like it keeping for themselves and it’s more of a personal kind of thing.
Points to remember
Instead of putting in a lot of credit card applications sit back and try to mitigate the reasons which turned against you. If a major credit card didn’t come under your grasp, stop applying then. A store credit card in this situation would be a better option or even a secured credit card.
There are credit cards that guarantee approval without checking your credit score initially but that too against high interest and high fees or both.
There is a thing called prepaid card prevailing in the market which is only helpful if you don’t have a debit card or a checking account and is considered to be the alternative to a credit card for making credit card like transactions, like paying at the grocery store.
Do not try applying for a card repeatedly, each time you apply for a credit card, banks make a hard inquiry into your credit history and that brings down your score even further. I’d suggest having a 4-6 months gap between two successive card application.
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