What credit cards are available to people with no credit history
If you have never borrowed money or opened a credit account, most standard credit cards will reject your process because you have no track record. Banks use your credit history to predict whether you will pay them back. With no history, they see only risk.
Three types of cards are designed for this situation: secured cards, student cards, and cards from credit unions. Secured cards are the most common route. You deposit cash with the bank — usually $200 to $2,500 — and that deposit becomes your credit limit. You use the card like any other card, pay your bill each month, and after 12 to 18 months of on-time payments, the bank converts it to a regular card and returns your deposit.
Student cards require proof of enrollment at a college or university but often have no deposit requirement. Credit union cards are available only if you are a member of a credit union, but they typically have lower fees and more flexible approval standards than banks.
Key Takeaways
- Secured cards require a cash deposit that becomes your credit limit, and most banks convert them to regular cards after 12 to 18 months of on-time payments.
- Student cards are available without a deposit if you can show proof of college enrollment, though some have annual fees.
- Credit unions often approve people with no credit history more readily than banks, and their cards usually carry lower fees.
- Your first card's main purpose is to build a credit history, not to borrow large amounts — keep balances low and pay on time every month.
- After you establish credit with a secured or student card, you can move to a standard card and use your deposit elsewhere.
How secured cards work and what they cost
A secured card works like this: you open a savings account with the bank, deposit money (the bank sets the minimum), and receive a credit card with a limit equal to your deposit. You then use that card to make purchases, receive a monthly bill, and pay it like any other card. The bank reports your payment history to the three credit bureaus — Equifax, Experian, and TransUnion — which is how you build credit.
The deposit stays in the savings account and earns little to no interest. It is not used to pay your bill; you pay your bill from your regular checking account. The deposit is held as collateral in case you stop paying.
Fees vary by bank. Common charges include an annual fee (usually $25 to $95), a monthly maintenance fee (sometimes $5 to $10), and interest on any balance you carry month to month. Some banks charge an process fee. Read the terms carefully — a card with a $50 annual fee and no monthly fee is often cheaper than one with a $10 monthly fee.
After 12 to 18 months of on-time payments, the bank will review your account. If you have paid every bill on time and kept your balance low, they will convert the card to a standard card, return your deposit, and close the secured savings account. At that point you can use your deposit for something else.
Student credit cards and how to get one
Student cards are offered by banks including Discover, Capital One, and Chase to people who can prove they are enrolled full-time at an accredited college or university. You will need your school's name and your student ID number when you explore.
Most student cards have no deposit requirement and no annual fee, which makes them cheaper than secured cards if you can get one. Interest rates are typically higher than cards for people with established credit, but that matters only if you carry a balance. Many student cards also offer a small cash-back reward — usually 1 percent on all purchases or higher on certain categories like dining or gas.
The catch is that you must be enrolled. Once you graduate or drop below full-time status, the bank may convert your card to a standard card (if your credit has improved) or close the account. Some banks will let you keep the card if you have been a customer for a certain length of time, usually two years.
To explore, visit the bank's website, select the student card option, and enter your school information. The decision usually comes within minutes or a few hours. If you are denied, you can explore for a secured card instead.
Credit union cards for people with no credit
Credit unions are member-owned financial institutions that often have more flexible lending standards than banks. If you are a member of a credit union, ask whether they offer cards for people with no credit history. Many do, and approval is often faster and easier than at a bank.
Credit union cards typically have lower annual fees and lower interest rates than bank secured cards. Some credit unions will issue an unsecured card (no deposit) to a new member after a short waiting period, usually 30 to 90 days. Others require a deposit but a smaller one than banks — sometimes as little as $100.
To join a credit union, you usually need to live or work in a certain area, work for a specific employer, or belong to a particular organization. Some credit unions have opened membership to anyone in the United States. Search for credit unions in your area at CO-OP, the credit union network, or ask your employer whether they sponsor a credit union.
Steps to explore for your first credit card
Start by deciding which type of card fits your situation. If you are a full-time student, explore for a student card first — it is the cheapest option. If you are not a student, check whether you can join a credit union; if yes, explore there. If neither option works, a secured card is your next step.
Once you have chosen a card, visit the bank or credit union's website and look for the process. You will need your Social Security number, date of birth, address, and income (or annual income from any source, including part-time work, student loans, or family support). Have your ID ready to verify your identity.
Fill out the process online. Most decisions come within minutes. If you are approved, the bank will tell you your credit limit and when your card will arrive — usually 5 to 10 business days. If you are denied, ask why. Some banks will tell you; others will not. If you were denied for a secured card, that is unusual and suggests a problem with your process or credit report.
Once your card arrives, set up it by calling the number on the back or using the bank's app. Make a small purchase to confirm it works, then set up automatic payments so you never miss a due date.
Building credit with your first card
Your credit score depends on five factors: payment history (35 percent), amounts owed (30 percent), length of credit history (15 percent), credit mix (10 percent), and new credit inquiries (10 percent). With your first card, you control the first two.
Pay on time, every time. Set up automatic payments for at least the minimum due, or better yet, the full balance. A single late payment can damage your score for years. If you cannot pay the full balance, pay as much as you can — the lower your balance relative to your limit, the better your score.
Keep your balance low. Even if your limit is $500, try to keep your balance under $50 or $100. Banks report your balance to credit bureaus every month, and a high balance-to-limit ratio hurts your score. This is called your utilization rate.
Do not close the card after it converts. Once the bank converts your secured card to a standard card and returns your deposit, keep using it occasionally and pay it off. Closing old accounts can lower your score because it shortens your credit history and raises your utilization rate on other cards.
After 6 to 12 months of on-time payments, your credit score should improve enough to may have access to for a second card or a small personal loan. That mix of credit types — a card and an installment loan — helps your score further.
What to do if you are denied
If a bank denies your process for a secured card, ask for the reason. Banks are required to tell you if you ask. Common reasons include a problem with your Social Security number, an error on your credit report, or a history of unpaid debts.
If the reason is an error on your credit report, you can dispute it for free. Visit AnnualCreditReport.com, order your free credit report from all three bureaus, and look for mistakes. If you find one, file a dispute with the bureau that reported it. The bureau must investigate within 30 days.
If the reason is unpaid debts, you have a harder problem. Some banks will approve a secured card even if you have old unpaid accounts, but not all. If you were denied everywhere, consider paying off the old debt first, or waiting a year and reapplying. Your credit report improves over time even without new credit.
If the reason is unclear or you believe it is unfair, ask to speak with a supervisor or explore at a different bank. Different banks have different standards.
Frequently Asked Questions
How long does it take to build credit with a secured card?
Most credit bureaus begin reporting your account within 30 to 60 days of opening it. Your score will start to improve after three to six months of on-time payments. After 12 to 18 months, you should have enough history to may have access to for a standard card or a small loan.
Can I use my secured card deposit to pay my bill?
No. Your deposit is held in a separate savings account and is not linked to your card payments. You must pay your bill from your checking account or through the bank's payment system. The deposit is collateral only.
What is the difference between a secured card and a prepaid card?
A prepaid card is not a credit card — it does not build credit because the issuer does not report to credit bureaus. A secured credit card reports to all three bureaus and builds your credit history. They look similar but work very differently.
Will explore for multiple cards hurt my credit?
Each process creates a hard inquiry on your credit report, which can lower your score slightly for a few months. explore for one card, wait for a decision, and then explore for another if needed. Avoid explore for multiple cards in the same week.
Can I get a credit card if I have no income?
Some banks will approve a secured card if you have no income, because your deposit is collateral. Others require proof of income or allow you to count student loans or family support. Call the bank before you explore to ask what income sources they accept.