CREDIT CARDS FOR PEOPLE WITH NO CREDIT HISTORY

Having no credit history can actually be a mark against you in the world of credit cards. While you have not run up enormous debt or missed payments, you have also not proven that you can manage a credit card responsibly by paying your balance due on time. 

For credit card companies, a person with no credit history is a giant question mark – a virtual unknown.  They use the information from the credit reporting bureaus to determine a person's level of risk when considering them for a credit card.  If you have no credit history then you have no information on record for them to consider.  They have no way of knowing what kind of financial sense you have.  Still, there are options for obtaining a credit card when you have no credit history.

Before you even try to get your first credit card, you should understand how credit operates.  It will help you in trying to get a credit card and help you in building a good credit history.  The first thing a credit card company considers when reviewing an application is the person's credit score.  A credit score is a point value that the credit reporting bureaus assign each person.  A credit score ranges from 600 to 800.  A person with no credit has a score of 600 not because they have practiced bad credit habits but because they have no credit activity.  The better a person's credit activity the higher their score.  Understanding their scoring system helps you realize that good credit is something earned, not just some unrelated number assigned to a person. 

Likewise, a person with bad credit practices is penalized with a low credit score.  Therefore, getting approved for a credit card is the first step towards building up your credit score.  The next steps are based on your ability to use your credit card wisely.  Using a credit card wisely and building a good credit rating and history will help you beyond the world of credit cards.  Good credit card practices can help you get approved for other forms of credit, such as auto loans and home mortgages.  Good credit ratings can also qualify you for lower interest rates on these types of loans. 

Obtaining a credit card with no credit history will most likely have some extra requirements beyond the standard credit card offered to those with good credit.  Just consider the following three issues when shopping for a credit card:

1. APR – Most credit card offers to someone with no credit will have a higher interest rate than the industry standard.  Some of these interest rates could be as high as 30%.  Just remember if you only use your card for small purchases and pay the bill in full on time then you won't be buried by high interest rates. Just use the card as a tool towards the goal of building good credit.  Once you have raised your credit score you can obtain a credit card with lower rates.
2. ANNUAL FEES – For someone with no credit history, an initial credit card offer will require paying an annual fee for use of the credit card.  These fees normally average about $50.  Be watchful for cards whose fees greatly exceed this norm. 
3. CREDIT LIMITS – A beginning credit card will usually have a very low credit limit. The limit can be as low as $250.  This low limit protects the credit card issuer if the applicant turns out to be a bad credit risk.  However, good credit practices can mean that after six months you can request and usually receive a credit limit increase.

There are numerous credit card offers on the internet that consider those with no credit history.  You can try for an unsecured card, a secured card, or a bad credit credit card.  The following five credit card have offers that seem favorable towards those with no credit:

• Capital One Secured Master Card
• First Premier Bank Classic Credit Card
• HSBC Bank of Nevada's Orchard Bank Visa Card
• HSBS Bank of Nevada's Orchard Bank Classic MasterCard
• Centennial Classic Credit Card

These are not the only financial institutions that consider those with no credit history for credit cards.  They are just a starting point for finding a credit card that will help a person with no credit history develop some positive credit.  If these offers don't appeal to you or meet your needs, then continue shopping around and find that card that meets your needs and is willing to give you your chance to start on the road to having a good credit history.

BEST CREDIT CARDS TO HAVE

Today's credit cards are not your momma's credit cards.  It used to be that you applied for credit and, if approved, you got a little plastic card in the mail.  You used the card to pay for purchases and then got a bill once a month which you could pay in full or installments (with interest of course).

In more recent times, credit cards have evolved.  Long gone are the days of just two, three, or four credit cards. We started out with Master Card, Visa, and American Express.  Then, along came Discover.  That was pretty much it for major credit cards. Then, banks jumped into the arena and started issuing credit cards.  The market got competitive and soon credit card companies soon found they had to offer "extras" to compete for customers.  Now, there are literally thousands of credit cards to choose from and the process of choosing just one—the best one---can be daunting. 

Before you even start to weigh your options you whittle down your choices, you need to do a little self-discovery.  There are several points to ponder about why you need a credit card, how you will use a credit card, and what type of credit card will best meet your needs. 

You need to ask yourself what is the primary reason you need a credit card and how will you use it. Notice the word need?  You need to consider if your attempt to get a credit card is for a needful purpose, like emergencies.  A lot of people say they are going to only use it for emergencies, but then whip it out to pay for every purchase from groceries, to gas, to that fast food at the drive thru. You need to realistically predetermine what you want the credit card for and how you will be using it.  This really effects what type of card you should get.

 If you really are going to use it only for emergencies and pay it in full whenever you have a balance, then interest rates are not an issue and a card with no annual fee would be best for you.  If you are going to use it to pay for everyday purchases and carry a balance, then you certainly want a card that has low interest rates. In addition to low interest, the best credit card for you will be one that offers a high credit limit.  This would be the best credit card for you because you don't want to max out your credit card or hover just at your limit every month; doing that can cause your credit score to take a nosedive.

If you are going to use a credit card for most purchases then consider a credit card that offers some rewards or incentives for your spending.  To remain competitive many credit card companies are offering these "extras" to entice customers to pay for purchases with their credit cards.  Some cards offer points for every dollar charged.  These points can then be redeemed for various freebies and discounts.  Some of the most popular points offers are for travel—with deep discounts on airlines tickets, hotels, and rental cars.  If you travel frequently by air, then the best credit card for you may be one that offers airline miles as an incentive to use your credit card to pay for purchases. 

Also, some credit cards have frequent flyer rewards.  If you travel a lot then this may be the best credit card for you.  Your flight miles can earn you bonus points towards other travel related rewards.  If you are not much of a traveler, then such credit cards would not be best for you.  You may want to consider a credit card that offers cash back incentives.  These cards offer you money back for every dollar you change to their credit card.  If you plan on using your credit card to pay for most of your purchases, then a cash back credit card would be the best choice for you.

There is no one best credit card for everyone!  Be wary of any advertisement that makes that claim.  The best credit card for any individual is the one that best fits their spending habits and suits their lifestyle.  A person who doesn't travel doesn't need to rack up thousands of free airline miles. And, a person who is only going to use the card for emergencies doesn't need to pay exorbitant annual fees. But, someone who is going to use their card everyday may want to pay a higher annual fee in exchange for a low interest rate. 

The best credit card to have is the one that best fits your needs.  And the only way you will know which one is best for you is to be aware of your expectations and then match those with a card whose offers best meet those needs.