How to get a credit card with no credit history
For people just starting out or who are new to a country, having no credit history is a real and big problem. Your credit history is how banks and lenders find out if you are a high risk person to lend money to. In other words your credit rating tells potential lenders how likely you are to pay them back. Without this information many lenders won’t talk to you. However there are ways to legally get a credit card with no credit history.
Get a credit card through work
Often people who move to a new country have a job there already. If the company has company credit cards, that is one way to develop a line of credit. The card is a corporate card, but it is in your name so it affects your credit history. Typically the way companies work is that you spend the money for work related expenses, you pay it off with your own money, and then the company pays you back. This method has the added benefit that you are less likely to overspend since it’s the company card and your spending is being watched.
Get a secured credit card
This is the easiest way that anyone who is 18 years and older can get a credit card is a secured card. This is a credit card where the company holds your money to cover your limit. So if you have a $1000 limit on your secured credit card, then the credit card company or bank is holding $1000 of your money as assurance that your debt will be paid off no matter what. They have to pay you interest on your money, and generally after 2 years your credit history will be good enough (if you pay things off on time) to get an unsecured normal credit card and get your money back. While you do have to save up that money before getting the card, it’s a very good way to get a card because you are essentially guaranteed to get one.
What about prepaid cards or a VISA bank card?
Have you been in line at to pay at a store and see pre-paid credit cards for sale? They are great if you don’t have a card, but they aren’t tied to your name. That means when you spend them, it doesn’t help your credit history. Also your credit history is a record of you paying off your credit, and if it’s pre-paid that is not necessary. The same idea is true about your bank card that is associated with a credit card – it’s just like a pre-paid card because the money is taken from your bank account and you don’t have a bill to pay at the end of the month. These are great ways to get access to credit card only places of business, such as on the Internet, however it won’t help your credit history.
So if you have no credit history you have to do a bit more work to get a credit card, but if you behave yourself and pay it off on time before you know it you will have a good credit history and can switch over to a regular credit card.