How do I get a credit card (Visa or MasterCard) with no credit history?… This is one of the most frequently asked questions on many credit related forums and blogs.
This question is often asked by two categories of people: those applying for credit cards for the first time, such as students looking for the best credit cards for college students, and those who have had credit cards in the past, but for one reason or another, have developed a bad credit rating, making it difficult for them to get a new card.
For the young or “first timers” who are trying to establish credit for the first time, you will have to create one which will require a period of between six months and a year before applying for a credit card.
For those who have a bad credit history, it may take several years before qualifying for a credit card. You will have to begin by paying your bills in time and ensuring that your debt-to income ratio is always low before applying for your next credit card.
1- Department store credit card
One of the tried and tested ways of establishing your credit rating is through initially acquiring a department store credit card. It is a lot easier to acquire these cards, although their interest rates are extremely high, ranging from between 21 and 33%.
It is important to constantly remind yourself that your main aim is to use this card to establish your credit rating, not to purchase items that would only result in you amassing debt.
To avoid paying exorbitant fees, purchase items that you are sure you can afford, then pay at the end of the month without fail. In this way, you will develop a good enough rating to be considered for a Visa or MasterCard. Department stores like JC Penney or Sears offer these credit cards.
2- Gas station credit cards
Gas companies like Texaco and Exxon Mobil also give cards which can be useful in enhancing your credit rating. The only challenge is that some gas companies do not report your payment history to any of the existing Credit Reference Bureaus, therefore you will be required to do some research to ensure that the gas card company you settle for actually reports its clients’ history on one of the major reference bureaus. Watch out for the outrageous interest rates charged as well.
3- Secured credit cards
Another great option for building a credit history so you can get a real credit card eventually is to use secured credit cards. Again, make sure the provider you choose, does report to all 3 major credit bureaus.
You will be required to use these cards regularly and more importantly pay your bill on time every month. Even the most minor delays in your monthly payments will have a negative effect on your credit rating, making it impossible for you to get your desired credit card. Make follow-ups with the card provider to ensure that your history is being updated.
Requirements for applying and qualifying for a credit card
It is important to ensure that you have a good credit history before you apply for a credit Card. Using the kind of credit cards mentioned above, you can build your credit history over time. Once you have a decent history, do some research to find out whats the best credit card for you. But before you apply for any credit card, make sure you meet the requirements below.
- You must be over the age limit of 18 years.
- You must have an income source, or be employed.
- You must have a checking and savings account at a reputable bank.
- You should have a telephone account in your own name.
- Your monthly expenditure should not exceed half your monthly income.
- Your annual income should be above $12,000.
A few years back, Congress passed The Card Act that requires credit card companies to carry out due diligence before giving credit cards to persons below the age of 21 years.
Those under this age will have to have a co-signer, have to prove to be under employment, have to prove they can support themselves and live on their own. Often, you will require your parent to co-sign for you in cases where you are a college student or are under the age limit. In some cases, even adults need co-signers to get a credit card for the first time.