Looking for credit cards for people with no credit history? You’re in luck — companies are perfectly willing to take on customers with limited or no credit history. In fact, people with no debt history may be surprised to learn that they have an easier time of obtaining a line of credit than people with a bad history. This has not always been the case. Until recently, VISA and MasterCard programs for people with no history were almost always “secured cards” — cards backed up by collateral, usually in the form of a savings account.
The top unsecured lending companies eventually realized a whole class of people out there existed who didn’t use their services before, but are trustworthy. Also, with the downturn in the economy, lenders are more likely to offer lines of credit to customers without a history than to those with a bad FICO score.
When looking for Visa, MasterCard, and department store cards for people with no credit history, be sure to compare interest rates, annual fees, and any perks the card may offer. For instance, most programs are aimed at customers without long history of lending have a very low annual fee — somewhere between $20 and $30. Should you come across a card that charges a fee far outside this range, it simply isn’t worth it. One of the cards profiled below, the MTV Visa card from Capital One, offers a rewards program to its members, which is not a common feature for credit cards for limited credit.
If you’re looking for perks like rewards and cashback, check out a MTV Visa offer. In other words, the variety of offers for people with no credit history is so huge that you can tailor your borrowing experience to your needs.
Capital One Classic Platinum for Young Adults
Most people who have no credit history are teenagers or young adults who simply haven’t had the need to charge. If you or your teenage child is headed off to college in the next few years, it would be a good idea to sign them up for this card from Capital One. Building a credit history will help them secure the private student loans they will no doubt need to cover the rising cost of education. As an added bonus, you can teach your kids the proper use of a charge card, which is the perfect way to teach them to be financially responsible.
The Classic Platinum card has everything you’re looking for in a credit card for people with no credit history. The annual fee is a paltry $19, and there are no built-in program fees or monthly fees for use of the card.
The fee to activate the card is another $19, meaning it will cost less than $40 to set up. For the first six months, the cardholder will enjoy using their interest fee — but be careful, because after that initial period, the APR shoots up to 17.79% — a relatively high number for a consumers, but much lower than other offers aimed at people with no credit history.
Young adults may enjoy the “fun” aspect of designing their own plastic. They can upload their own personalized image onto the card — a meaningless perk in terms of finances, but one that is attractive to the younger set.
This card is a Platinum MasterCard, branded with the MasterCard logo, offering young adults the ability to shop anywhere MasterCard is accepted. Users of this card also enjoy Mastercard’s Zero Liability program, meaning they aren’t responsible for charges on a reported lost or stolen card. This is my top pick for young adults looking to build their own spending history.
Applied Bank Secured Visa
The benefit of opening a secured credit card is that you simply can’t spend more than you can afford. A secured card is backed up by a locked savings account (a fancy term for a deposit) or other collateral account, meaning if the cardholder can’t make a payment, the lender will simply draw the payment from the collateral account. With a super low 9.99% fixed APR, this secured Visa card from Applied Bank has one of the lowest interest rates I’ve seen in cards aimed at people with no credit history.
Unlike prepaid debit cards, a secured credit card’s activity can be reported to credit bureaus. Applied Bank reports card activity on this secured Visa card to three major reporting bureaus, making it easy to build a credit history fast. The annual fee is a bit higher than other cards meant for credit history building, weighing in at $50 per year, but there are very few other fees associated with using this card.
You will not be charged any monthly fees, as long as you make a minimum of 15 transactions per month, or sign up for free direct deposit of a paycheck or government benefit check. On the downside, the credit limit is tied directly to the amount the cardholder deposits in their “collateral account”, with a minimum of $200 and a maximum of $5,000. If you’re looking for a high limit credit card, this is not the card for you.
Capital One MTV Visa Card
Capital One seems to be the heavyweight in the world of credit cards for people with no credit history. This Visa card seems aimed at the young adult set — between its MTV theme and the “rewards” program, older adults may not want to bother with this card. A standout feature of the Capital One MTV Visa card is that it comes with no annual fee. Cardholders will pay for this feature due to a very high 24.9% interest rate, but the lack of an annual fee is pretty much unique to this card. The rewards program that comes with the Capital One MTV Visa card is interesting — cardholders earn “points” based on their spending, between 2 and 5 points per dollar spent depending on what it is spent on. These points can be turned in for rewards ranging from music and entertainment items, to charity donations and tickets to MTV sponsored events. As an incentive to keep your account in good standing, Visa will reward the cardholder with 25 free ‘bonus points’ for each month they make at least a minimum payment. Of course, if building credit is your goal, you should make a monthly payment above the minimum — and the 25 point reward is as good incentive as any to stay in the black.
Those are by no means the only opportunities you have to build (or rebuild) your FICO score. Here are 14 other secured credit cards you can research. Each of these has advantages and disadvantages, with a wide range of APR numbers, annual fees, and transaction fees. Browse through the terms and conditions for each to see which is best for your situation. If you don’t have the time for that, I’ve done the work for you on the homepage of this site, with a brief review of all 14 cards updated for 2015.
- VISA OpenSKy Secured Credit Card
- Capital One Secured MasterCard
- First National Bank Secured Visa Card
- primor Secured Visa Classic Card
- primor Secured Visa Gold Card
- First Progress Platinum Prestige MasterCard Secured
- First Progress Platinum Elite MasterCard Secured
- First Progress Platinum Select MasterCard Secured
- The Secured Visa from Merrick Bank
- USAA Secured Card Platinum Visa
- USAA Secured Card Platinum MasterCard
- USAA Secured Card American Express Card
- Fifty Third Platinum from Fifty Third Bank
- UNITY Visa Secured Credit Card (“The Comeback Card”)
Even that isn’t the sum total of your options. Student card programs offer many of the same advantages, if you happen to be in college, university, technical school, or some other trade school. Once you start shopping for lenders, you’ll find a huge variety of ways to build a positive financial history.
Companies fight hard to sign up consumers like you, because they assume they’ll find a loyal customer who’ll be spending for decades-upon-decades. Financing youthful shoppers and millennials is a competitive environment, so take advantage of the market and find an advantageous program with positive terms for you.
How to Build Your Credit Score
This 5-minute video discusses how people can build their FICO score. Many people do better taking oral instructions or watching a video lecture, so I wanted to include a how-to video from YouTube. I’ve received positive feedback about my video selections, so I’m going to continue posting them until you guys tell me not to. You might not want to hear consumer wisdom from a kid, but he’s a presenter. I’m sure he didn’t write the copy.
The concepts aren’t hard, though they are sometimes hard to implement, because life gets complicated. Self-discipline is the hardest thing about maintaining a budget. The consumer economy is designed to make products and services alluring. There is a science to getting people to buy things. When you choose not to overspend and instead build up your credit rating, you are beating the science of advertisement. Pat yourself on the back.
Hopefully, one of the above options meets your personal financial needs. When you have limited or no credit history, it can be difficult or even impossible to secure bank loans, purchase a car, or even rent an apartment. In order to build a record of your own, you need to take on one of these cards for people with no credit history, make regular monthly payments (above the minimum), and only spend what you can afford. Regular monthly payments on a charge card and a good amount of time with an open account will give you the credit history you’re looking for.