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All About Credit Cards That Help Build Your Credit
When you are just starting out, it can be tough to land the car you want, the apartment you need and even the job you are hoping for. Why? Because so much of our society centers around having good credit. But in a few short months, you can establish credit and be on your way to financial bliss.
We researched and evaluated more than 260 credit card offers that people with a limited credit profile can apply for, using criteria such as: ability to get approved, rewards rate, fees and rates, customer service, ability to improve credit line, benefits/perks, and more. Here, we look at:
Make 2020 your year for building credit.
Best Credit Cards for No Credit of 2020
Discover it® Student Cash Back
Why it’s the best cash back credit card for people with no credit
With the Discover it Student Cash Back, you can enjoy the rewards of the Discover it Cash Back – activate quarterly to earn 5% cash back on rotating categories up to $1,500 a quarter (it’s 1% after that).
There are a lot of advantages to this credit-starter card: For example, get no annual fee, no late fee on your first late payment and no APR change for paying late.
While you can get 0% for 6 months as an intro APR on purchases, the best you’re going to get for balance transfers is 10.99% for 6 months. It’s 12.99% - 21.99% Variable after that.
Why it’s the best everyday spending credit card for people with no credit
While high-value rewards cards might feature categories like Amazon.com and wholesale clubs, the Discover it Secured rewards for everyday categories like 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. Then, it’s 1% back.
This card offers no annual fee. Also, you can enjoy 100% U.S. based customer service and get your free Credit Scorecard with your FICO® Credit Score.
There is no 0% intro APR offer on balance transfers – it’s 10.99% for 6 months, then 22.99% Variable.
Capital One® Platinum Credit Card
Why it’s the best no annual fee credit card for people with no credit
This credit-builder card is top-notch – in addition no hidden fees (you’ll often see hidden fees with these kinds of cards), there’s also no annual fee.
With the Capital One Platinum, you can pay by check, online or at a local branch without paying a fee. Also, you can pick your monthly due date.
Unfortunately, this card has no sign-up bonus or ongoing rewards, making it a tough choice if you are looking for a multi-purpose card for the long haul.
Capital One® Secured Mastercard®
Why it’s the best credit card for credit line growth for people with no credit
With the Capital One Secured Mastercard, you have the opportunity to raise your credit limit after your first 6 months of on-time payments and responsible use, which is a solid feature for a credit-builder card.
As a Mastercard, this product is widely accepted worldwide, making it extraordinarily convenient when traveling.
There are no sign-up bonus, no ongoing rewards, and the regular APR is a super high 26.99% (Variable), making it a poor option for carrying a balance.
Deserve® EDU Mastercard for Students
Why it’s the best credit card for people with no credit history
The Deserve® EDU Mastercard for Students looks at more than just credit history when applying, which can be a great benefit to a student who has never had a credit card before. Plus, international students don’t need a Social Security number to apply, so any eligible student can gain access to credit.
You can earn 1% cash back on every purchase you make at any time, making this a great way to earn rewards while strengthening your credit health.
If you do carry a balance from month to month, the APR (18.74% Variable) is fairly high, so we recommend paying your balance in full and on time if at all possible.
Discover it® Student chrome
Why it’s the best student credit card for people with no credit
The Discover it Student chrome has a fun feature for the ambitious student – get a $20 statement credit each school year your GPA is 3.0 or higher for up to the next 5 years.
The ongoing rewards on this card are excellent, with 2% back at gas stations and restaurants up to $1,000 a quarter on combined spending (then 1% thereafter), as well as double your rewards at the end of your first year.
The regular APR is 12.99% - 21.99% Variable, which makes it not the best choice for carrying a balance, although you can get a 0% for 6 months intro APR on purchases.
Citi® Secured Mastercard®
Why it’s the best credit card for flexible payments for people with no credit
With the Citi Secured Mastercard, you can choose your due date from the beginning, middle or end of the month, which means you can line up your bill with when you get paid.
This card has an auto-pay feature, as well as the ability to sign up for alerts, making it that much easier to pay on time, every time, the most important element of building your credit.
This card has no sign-up bonus and no ongoing rewards, and the regular APR is 22.49% (Variable), although it also has no annual fee.
Self – Credit Builder Account + Secured Visa® Credit Card
Why it’s the best for building credit for people with no credit
Not only does the Self Credit Builder Account and Credit Card combination allow you to dodge the credit history hard pull, extensive applications and high out-of-pocket deposit necessary for other secured cards, but you also develop good credit habits while building two types of credit with all 3 credit bureaus.
Establishing a credit mix with a loan and credit card boosts 10% of your credit score in a way other cards alone can’t. Plus, you’ll earn interest on your deposit once you receive it and can receive a higher credit limit depending on your deposit size.
The one-time account fee of $9 isn’t much and the APR is relatively low, but the credit card’s $25 annual fee and another potential interest payment besides your loan (if you carry a balance) could add up for new cardholders. If you need a secured card now, keep in mind you have to make the account and qualifying payments first.
Capital One® QuicksilverOne® Cash Rewards Credit Card
Why it’s the best flat-rate rewards credit card for people with no credit
The QuicksilverOne immediately delivers you 1.5% cash back for every purchase, every day, making it competitive with other cash back cards, such as the Capital One® Quicksilver® Cash Rewards Credit Card.
Because this card’s cash back rate is flat, there is no required quarterly signup or maximum allowed spend. Also, your cash back doesn’t expire for the life of the card.
This card doesn’t have a sign-up bonus, unlike the Quicksilver. Also, there’s an annual fee of $39, which isn’t waived the first year, and the regular APR is incredibly high at 26.99% (Variable).
Journey® Student Rewards from Capital One®
Why it’s the best credit card for bill choice with no credit
When you’re just starting out with your credit, you want a little forgiveness, which this card offers. You get to pick your monthly due date, and there is no annual fee or foreign transaction fee.
Although the default ongoing rewards are 1% cash back on all purchases, the Journey Student Rewards gives you 1.25% back when you pay on time, giving you just another incentive to be responsible.
There’s no signup bonus, although that’s not unusual for a credit card that accepts consumers with fair credit. Also, like the QuicksilverOne, the APR is super high at 26.99% (Variable).
For more credit cards tailored to college students or recent graduates with a short or no credit history, see our student credit cards.
Summary of the Best Credit Cards for No Credit
|Discover it® Student Cash Back
||5% cash back on rotating categories (up to $1500 per quarter, 1% thereafter, activation required)
||4.2 / 5
|Discover it® Secured
||2% cash back at gas stations and restaurants (up to $1,000 in purchases per quarter), 1% cash back on all other purchases
||$200 – $2,500
||4.1 / 5
|Capital One® Platinum Credit Card
||No annual fee
||3.7 / 5
|Capital One® Secured Mastercard®
||Credit line growth
||$49 – $200
||3.4 / 5
|Deserve® EDU Mastercard for Students
||1% cash back on every purchase
||2.6 / 5
|Discover it® Student chrome
||2% cash back at gas stations and restaurants (on up to $1,000 in purchases per quarter, 1% thereafter), 1% cash back on general purchases
||4.2 / 5
|Citi® Secured Mastercard®
||$200 – $2,500
||3 / 5
|Self – Credit Builder Account + Secured Visa® Credit Card
||Make at least 3 monthly payments on time, have $100 or more in savings progress in your account, and be in good standing.
||3 / 5
|Capital One® QuicksilverOne® Cash Rewards Credit Card
||1.5% cash back on every purchase
||4.1 / 5
|Journey® Student Rewards from Capital One®
||1% cash back on all purchases, or 1.25% cash back on all purchases if you pay on time.
||2.1 / 5
Credit cards for no credit history analyzed: 264
Criteria used: Annual fee, regular APR, promotional APR (if any), other rates and fees, credit needed, ease of application process, rewards rates, rewards categories, redemption options, ability to improve credit line, tools to track credit score, customer service, security, other features and benefits
How can I get a credit card if I have no credit history?
There are cards out there that serve consumers who are new to credit. Sometimes, they want you to have a checking account, and they may require a refundable deposit of at least $200. Here is what you need to know about getting a card when you don’t have a credit history.
- Check your score. If you have a credit file, check your credit score either through MyFICO.com for about $20 for each score or see if your bank will provide your score for free. This is an excellent behavior to get in the habit of. (Some 62% of consumers correctly believed that checking their credit score didn’t affect their score, while 22% wrongly thought it did, according to Discover’s Current State of Consumer Credit Health report.)
- Look into a credit-builder loan. Check with your local financial institution about these small loans, which are designed primarily to help you build your credit. A local credit union is an excellent choice. You will likely need to open a checking or savings account with the institution.
- Consider a secured card. The fastest and easiest way to build credit is with a credit card, and a relatively easy card to land is a secured card. That’s because you put down a refundable deposit that is used to secure your credit limit. Just make sure the card issuer is going to send your credit habits to the credit bureaus.
- Research, then apply for one card. With your score handy, look at cards you are likely to get, checking annual fees and any other charges that might be incurred.
- See about being an authorized user. If you don’t think you will be able to get your own card or you want to take baby steps, see if you can become an authorized user on a responsible consumer’s card. Just make sure they pay on time and in full each month because their good credit habits will go on your file. Not all card issuers report authorized users’ information to the credit bureaus, so check. In a few months, you will be able to apply for your own card.
How to build your credit with no or little credit
There’s a lot of misinformation out there about building your credit, including how to properly manage your credit card. In fact, your credit card is one of your important tools for building credit, but it’s also critical to know how to manage your credit as a whole.
The fact is that we are increasingly checking our credit reports within a year (from 49% in 2014 to 57% in 2018), but the number of people who feel it’s important to actually check them is down (from 72% in 2014 to 67 percent in 2018), according to VantageScore’s eighth annual credit score survey in conjunction with the Consumer Federation of America.
In 2020, plan to be one of the consumers who check their credit reports regularly. Ideally, check one of your 3 reports every 4 months on AnnualCreditReport.com for free. Correct any errors with the 3 major credit bureaus. Make sure there aren’t any accounts you don’t recognize. Also, pay off any outstanding debts you have, or at least come up with a payment plan.
There are a number of other tricks to improve your credit, many of which tie to credit cards. By managing your credit card and other bills, you are well on your way to building your credit this year:
- Pay your bills on time. If you are not doing this already, then start immediately. Keep in mind that even if a creditor, such as a landlord, may not send positive credit patterns, the creditor may send bad credit habits. For that reason, it’s important to pay each and every month.
- Get a credit card that you can use responsibly. This is the fastest way to build credit.
- Use your credit card. By making a small charge on your card each month, you keep your account active.
- Pay your card in full. If you pay your card in full each month, you avoid paying interest charges and you build your credit that much faster. That’s because your available credit by your balance is factored in. If your available credit is $1,000 and your balance is $100, then your credit utilization ratio is 10% – you want it as close to zero as possible, although 10% is considered good.
- Don’t be tempted to take out more credit. Think strategically – don’t apply for loans or credit cards without a plan, because applications can affect your credit. However, there are some times when taking out credit is a good idea. For example, by taking out a credit-builder loan or some other type of installment loan, such as a car loan, you give your credit a little boost.
If you’ve made up your mind to get your first credit card in 2020, you’ve come to the right place. However, with hundreds of credit cards in the market, it can be overwhelming to decide which card you should get first. We can help with that.
For example, you’ll need to look at which type of card you want (or can get); whether there are fees; and what rewards are offered. We’ll walk you through the different types of cards and what you should pay attention to.
- Credit reporting. Does the card issuer report to the credit bureaus? This is a deal-breaker because if the issuer doesn’t report to the bureaus, you won’t be able to improve your credit with the card.
- Fees. Are you clear about the fees? Look at not only the better-known fees in the “Schumer Box,” such as late and returned payment fees, but also fees lower in the text, including “billing statement copy fee” and “expedited telephone payment fee.” Make sure you won’t be nickel and dimed with your new card.
- Types of cards
- Secured. This card requires a refundable deposit, typically starting at $200. This is a good card for someone with bad or no credit.
- Unsecured. Most cards are unsecured, which means there is no required deposit. There are some unsecured cards available for consumers just starting out.
- Student. These cards are usually for the beginner consumer, although they don’t necessarily vary significantly from other cards.
- Rewards. The ultimate goal for many is to work toward a rewards card, which typically requires good or excellent credit, but some beginner cards include rewards.
- Gas. Gas cards typically require lower credit, and they can have loyalty to specific brands. Some are co-branded, which means they are aligned with a card network, such as Visa or Mastercard, which allows you to use the card anywhere the network is accepted. Of 28 gas cards surveyed in 2018, 11 were found to be co-branded.
- Qualification requirements. Check that you have a high likelihood of landing the card before applying, because every time you apply for a card, it impacts your credit score by about 5 points.
- Annual fee. While this isn’t necessarily a deal-breaker, you’ll want to pay attention to make sure it’s something you can afford and that it’s worth your while.
- Rewards and benefits. Some starter cards offer rewards, although it can be worth your while to minimize the fees for now and plan to get a rewards card in a year or so.
- Interest rate. While it’s usually a bad idea to carry a balance on your credit card, because you’ll pay interest charges if you do, you’ll want to pay attention to the APR, just in case.
“You’ll start building a positive credit history within a month of signing up for your first credit card, as long as you pay the bill on time,” says Ted Rossman, industry analyst at CreditCards.com. “You should also try to maintain a utilization ratio (credit used divided by credit available) below 30%. After about six months, you should be able to upgrade from a secured card or another type of starter card to a card with even better terms and more lucrative rewards.”
Why establishing a credit history matters
Unless you live on a plot of land you own free and clear in a tiny house powered by propane, your credit matters.
That’s because not only credit card issuers and lenders make decisions based on your credit. Employers, landlords, even utility companies are interested in how you handle credit.
Here are some primary ways credit can affect your world:
- Insurance. Your insurance company looks at your credit when deciding how much your premiums should be.
- Credit card. When you are on the hunt for a credit card, your first stop needs to be a card that will likely accept your credit score – anything above will only set you up for rejection.
- Mortgage or car loan. Perhaps the best-known reason for why credit matters, lenders look at your credit to decide which product, if any, to grant you, as well as product terms. That means the higher your score, the better the terms, usually.
- Job. While potential employers can’t check your credit without your approval, companies are increasingly studying job applicants’ credit history before making a final decision.
- Apartment. Landlords are increasingly looking at potential renters’ credit when making a decision on which renter to accept.
- Utility and cellphone accounts. Utility and cellphone companies check your credit before making a call on whether to require a down payment and in some cases, even whether to accept you as a customer.
Can you get a credit card at 18?
Turning 18 this year? Yes, you can get a credit card when you are 18, but it is complicated.
That’s because the Credit CARD Act of 2009 is designed to make sure young consumers don’t take out a financial product before they are financially or emotionally able to handle it. Unfortunately, the easiest and fastest way to build credit is with a credit card.
While it can be frustrating to have to jump through hoops to be able to start building your credit, there are some workarounds, such as becoming an authorized user on someone else’s account.
How to get a credit card when you are under 21
- Do you have credit files? The first thing you should do when you turn 18 is to check your credit files with the 3 major credit bureaus, TransUnion, Experian and Equifax. You want to make sure that a) you even have a file and b) that the file is accurate. Have the bureaus correct any incomplete or inaccurate information. You shouldn’t have a file if you don’t have any credit accounts.
- Do you have income? If you are under 21, you are required by the Credit CARD Act of 2009 to have your own income if you want a credit card of your own.
- Could you be an authorized user? If you don’t have your own income or your credit file is too thin (not enough credit information), look into being an authorized user on a responsible consumer’s credit card account. You are not legally responsible for the bill, but you benefit from their good credit habits. Also, unlike co-signing, it’s easy to be taken off an account as an authorized user. A couple of things to know about being an authorized user:
- Make sure the holder of the account pays on time and in full every month.
- Keep track of your credit reports and scores to make sure they are on track.
- Work toward getting your own card, because the benefits from being an authorized user are only as long as you are on that account.
- Not all card issuers report authorized users’ credit habits to the 3 major credit bureaus, so check.
Can I get a credit card with no income?
If you are over 21 years old, you don’t have to have a job to apply for a credit card, provided that you have reasonable access to income, for example, that of a partner or spouse. The Consumer Financial Protection Bureau amended the CARD Act of 2009 in 2013 to allow at-home parents the ability to get a credit card without a job.
What credit limit can I get?
While when you’re brand new to credit, you can expect to start out with a credit limit of only about $200, you’ll find as you go that your credit limit is not necessarily higher because you have a higher score. Other factors such as your income are also considered.
For example, the average FICO Score for Washington, D.C., is only 703, while it has the second-highest average credit limit of $37,845 among U.S. states, according to Experian. Compare that to Hawaii, with an average credit score of 723, while the average credit limit is more than $4,000 less at $33,254.
That’s not to say you are stuck with a $200 credit limit forever. As your score rises, your risk for borrowing will improve and lenders will take notice. In fact, the Capital One® Secured Mastercard® may reward you with a credit limit increase after your first 6 months of on-time payments and an additional deposit isn’t required.
Also, if your score is steadily improving, simply ask for a limit increase. We’ve found that 85% of consumers who asked received a higher credit limit.
What information is needed to apply for a credit card?
Here are common questions asked when you apply for a credit card. As you can see, you might be asked about whether you own or rent, your monthly housing payment and source of income. If it’s a starter card, you may be asked if you have a bank account, and if so, what type.
- Years at address
- Whether you own or rent
- Monthly housing payment
- Income source
- Liquid assets – cash or other owned items that can instantly be converted to cash
- Whether you have a bank account
- Type of bank account
- Date of birth
- Social Security number
- Mother’s maiden name
- U.S. citizenship
- Dual citizenship
What does insufficient credit history mean?
When a bank tells you that you have an insufficient credit history, it means that there is likely not a credit report on which to base a credit score.
So, you need credit reports, which are the documents where your credit history is collected from financial institutions and creditors. Then, you need a credit score for potential lenders to assess whether you are a good credit risk.
It takes at least 6 months of activity for a credit score to be assigned, so the sooner you get started the better. In addition to getting a credit card that doesn’t require credit, you can also apply for a credit-builder loan at your local bank or credit union.
Laura is an editor and writer at CreditCards.com. She has written extensively on all things credit cards and works to bring you the most up-to-date analysis and advice. Laura’s work has been cited in such publications as the New York Times and Associated Press. You can reach her by e-mail at firstname.lastname@example.org
CreditCards.com writer Mariah Ackary specializes in credit card rewards and small businesses. Through her research and advice, she hopes to make personal finance education easier and more approachable. Send your questions to email@example.com
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