4 ways to get a credit card and build credit (when you have no credit) 

 

Do you keep getting denied when applying for credit cards or personal loans? Chances are you have low credit score or no credit history. This article will show you four ways to obtain a credit card and start building your credit history.

I have a niece who was in her freshmen year of college. Like many young adults, she wanted to start building her credit and obtain a credit card.  So the first thing she did was to apply for as many credit cards as she can.  Consequently, many rejections letter came flying through the mailbox.

If you keep getting rejected when applying for a credit card or loan, here are four ways to solve your problem:

1.) Apply for a secured credit card.

To apply for a secured credit card, you must have a small sum of money, like $200, which serves as cash collateral.  For example, you deposit $200.00 and use that money as collateral to establish a credit card with a credit limit of $200.00. The idea is somewhat stupid. You give them money to ask for permission to use that money. However, because the bank is literally risk free, meaning the chance of losing money is low to none, your chances of getting an approval is very high. This is a way for you to show that you are responsible and can pay your bills on time.

Using the secured credit card, you can make small purchases and make payments on time. This is one way to build good credit. However, you will either swim or sink. Make sure you keep your balance low and make payments on time. High balances and late payments will greatly hurt your credit history and credit score.

Many secured credit cards offer no annual fee, no credit check, and a reasonable APR. Here are the best three secured cards based on your situation:

Capital One: for the first time applicant

Open Sky: for those who want to rebuild your credit

Discover: earn some cash back while you’re at it

2.) Apply for a student credit card if you’re a college student.

Since my niece was a college student, she was eligible for a student credit card. Student credit cards are designed for students with zero to no credit. This is the easiest unsecured credit card to get approved. If you are approved for a student credit card (same as any other credit card), be sure to keep your balance low and make payments on time.

Discover Student Card offers one of the best student credit cards in the industry. If you are a student, you can apply for it here.

3.) Get a co-signer or become an authorized user.

The rule of thumb is not to co-sign for anyone unless you are willing to pay for it.  However, in this case, someone such as your parents or guardians (who have an established strong credit history) can hold your hand to build your credit.  Have a your parent or someone who’s trusted to add you as an authorized user or co-sign a credit card for you. (*Here’s the catch: if the person who added you as an authorized user doesn’t keep a low balance or make payments on time, this can hurt your credit as well.)

If none of the above options sounds like something you are interested in, there is an alternative.

4.) Use Self Lender to establish a credit history.

Self Lender is an innovative start up that helps people build credit history. How this works is a partner bank lends you money that is held in a CD account. Next, you make 12 equal payments over course of the term. Your payment history is reported to the credit bureaus.  At the end of the term, you will have demonstrated payment history and as well as earning some interest.

You can find out more information about Self Lender and sign up for a free account here: Self Lender

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Recommended Book:

33 Ways To Raise Your Credit Score: Proven Strategies To Improve Your Credit and Get Out of Debt
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