How To Choose A Credit Card For No Credit History

Last updated Apr. 11, 2025 by Charles Zemub

Building credit from scratch can be a daunting task, especially when you’re just starting your financial journey. Whether you’re a recent high school graduate, a new immigrant, or someone who’s simply never needed credit before, getting your first credit card can feel like a catch-22: you need credit to get a card, but you need a card to build credit. This guide is designed to help you break that cycle. With the right strategies, you can select a suitable credit card and begin establishing a solid credit history, which will be invaluable in achieving future financial milestones such as buying a car, securing a loan, or even renting an apartment.

Understanding Credit Basics

Before diving into the process of selecting a credit card, it’s helpful to understand some key credit concepts:

1. Credit Score: Your credit score is a numerical representation of your creditworthiness, based on your credit history. Since you have no credit history, you’ll be starting with no score, but that’s okay—there are cards designed for this situation.

2. Credit Report: This is a comprehensive history of your credit behavior. It includes details about your loans, credit cards, payment history, and any instances of financial delinquency.

3. Interest Rates: These are the fees charged on the remaining balance of your credit card. Rates can vary, and are generally higher for new or unsecured credit lines.

4. Credit Limit: Your credit limit is the maximum amount you can borrow on your credit card. Beginners usually start with lower limits, which can be increased over time with responsible use.

5. Annual Percentage Rate (APR): This is the annual rate charged for borrowing, expressed as a single percentage that represents the actual yearly cost of funds over the term of a loan.

The Types of Cards to Consider

When you’re starting with no credit history, your options can be somewhat limited, but there are several kinds of cards that cater to beginners:

1. Secured Credit Cards: These require a cash deposit that serves as your credit limit. They’re an excellent starting point because they almost guarantee approval despite no credit history.

2. Student Credit Cards: Designed for college students, these cards often come with lower limits and fewer rewards but are still more accessible than standard credit cards.

3. Credit Builder Cards: Available at many banks, these cards are specifically designed to help new users build credit. They may also require a deposit or have a higher APR.

4. Retail Store Cards: Some retail stores offer credit cards that are easier to qualify for. While they can help build credit, use them cautiously as they often have high interest rates.

5. Co-Signed Credit Cards: A family member or friend with good credit can co-sign on your card, which can offer you the benefits of improved approval odds and potentially better terms.

Steps to Choose the Right Credit Card

Step 1: Evaluate Your Needs

Before applying for a credit card, consider what you need most from a card. Some people value low fees, while others prioritize rewards or cashback. Understanding your spending habits and financial objectives is key.

Step 2: Compare Offers

Once you have a sense of your needs, start comparing card offers. Pay close attention to:

• Interest Rates (APR)
• Fees: Annual fees, late payment fees, etc.
• Rewards and Cashback
• Grace Periods

Step 3: Scrutinize the Terms and Conditions

Every credit card comes with its own set of terms and conditions, detailing its fees, rates, and user agreement. Read these thoroughly to understand what you’re agreeing to.

Step 4: Consider Secured Cards

If you’re having trouble getting approved for a regular unsecured card, consider a secured card. These cards still report to the credit bureaus, thus helping you build your credit as you use them responsibly.

Step 5: Check for Pre-qualification

Many card issuers allow you to check for pre-qualification. This step doesn’t impact your credit score and helps you gauge your likelihood of approval.

Step 6: Apply Wisely

Once you’ve honed in on a card, apply with realistic expectations. Each application causes a minor dip in your credit score, so target cards for which you have a reasonable chance of approval.

Step 7: Use Responsibly

Upon receiving your card, the key to building credit is using it responsibly. Always pay your bills on time and keep your credit utilization below 30% to build a healthy credit score.

FAQs

What is a secured credit card?

A secured credit card is a card that requires a cash deposit upfront, which typically serves as your credit limit. It’s designed specifically for those with no credit or poor credit to help them build a positive credit history.

Do all credit cards help build credit?

Only credit cards that report to at least one of the major credit bureaus (Experian, Equifax, and TransUnion) contribute to your credit history. Be sure to verify this before applying.

How can I check my credit score?

Once you start establishing credit, you can check your score for free once a year from each of the major credit bureaus or through apps like Credit Karma and Experian.

How long does it take to build a credit score?

You’ll typically need three to six months of credit activity before a credit score can be calculated. Continued responsible behavior will steadily improve your score.

What if I get denied a credit card?

If denied, check the reason given by the lender. Address the issues cited where possible and consider applying for a secured card or becoming an authorized user on another account to build your credit.

By following these steps and utilizing the right tools, you can successfully choose a credit card that suits your needs and embark on your journey to establishing a solid credit foundation.