When it comes to applying for a credit card, having no credit is almost as challenging as having bad credit. Fortunately some of the best credit cards for people with bad credit are also good options for first-time applicants or people with no credit history at all.
Cards for those with bad credit aren’t necessarily a bad deal. It may be hard to find a rewards card, and if you do find one, it probably comes with an annual fee. You’re also unlikely to find a card with rock-bottom interest rates. As an example, the best credit cards for people with no credit history have an interest rate of around 15% — which won’t matter to you unless you carry a balance.
If you can, try to get an unsecured credit card. That means you don’t have to put down a deposit. Secured credit cards that require a refundable deposit (often between $50 and $200) are easier for first-time credit card applicants to qualify for because the deposit gives the card issuer some guarantee that you’ll pay back what you borrow.
Whether you end up with a secured or unsecured card, this is an opportunity to show that you can handle credit, which raises your score and opens the door to better options down the line. The most important thing you can do to raise your score is pay your bill on time, every time. It’s also helpful to use only a small percentage of your total available credit, which can be difficult if you have a very low credit limit when you’re first starting out.
A good rule of thumb: Purchases in any given month should add up to no more than 30% of your credit limit. For example, if you have a $300 credit limit, you can charge up to $100 in each billing cycle without damaging your credit score. If you need to charge more than that, you can pay the balance off early so you always have less than $100 owed on the card.
Over time, on-time payments and carefully controlling the size of your balance in relation to your credit limit will help you establish a strong credit history. You’re only a first-time credit card applicant once. Next time, you’ll be an old hand at this.
Athletic young man climbing a rope in a gym image via Shutterstock.
The post Can I Get a Bad Credit Credit Card if I Have No Credit? appeared first on NerdWallet Credit Card Blog.
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