Reader Mail: Getting a Credit Card When You Have No Credit

Please help me be a responsible adult—namely, how do I get a goddamn credit card without any credit?

I have a steady job and a growing savings account, but I missed the credit-card-getting part of being a student. Now I’m 23, and I would like to have a credit card to use while traveling (to reduce the risk with my debit card), to build up my credit score and eventually…well, whatever people do with credit scores. (I’m certainly not buying a house or a car any time soon.) My bank (Evil Large Bank) has said they will give me a secured card, but I hate the thought of giving them $500 for 12 months for the privilege of paying them back every month. Any tips or suggestions? — K.D.

Ah, this question. It’s a Catch-22 isn’t it? To get credit, you need to have a credit history, but how can you have a credit history, if you don’t have any credit? Creditors used to just hand out credit cards like candy on Halloween, and then we got ourselves into a huge financial mess, the CARD Act of 2009 was passed, and now creditors are a little more wary before approving someone for a card. I actually dislike credit cards—it’s so easy to get yourself into debt—but having one around is good for emergency purposes, and yes, having one and being responsible with it will give you a solid credit history, which is important when you’re doing things like renting an apartment, applying for a mortgage, car loan, etc. Some employers even look at your credit history as part of their hiring process. 

A secured credit card in one way to start building a credit record, and for those who don’t know how that works, it’s sort of like when you rent an apartment and you give your landlord a deposit. If you wreck your apartment, he (or she) can just pay for the damages out of your deposit. If you keep everything nice, you’ll get your deposit back. With a secured card, you have to give a deposit of at least 100 percent of your credit limit. So you’ll give your bank $500, and then they’ll give you a credit card with a limit of $500 on it. It’s totally annoying because it’s your money, and you’ll still have to make your payments each month. They just want that deposit there in case you don’t make your payments for some reason.

But you have other options besides this. You might be able to start with a store credit card (from a department store like Macy’s, or a clothing store like J. Crew or Gap). This is not ideal because store credit cards usually have high interest rates, and it’s easy to rack up a lot of debt on them, but if you don’t want to put down a deposit on a secured card and trust yourself enough to be responsible with a store credit card, I’d look into this.

Another option: Get a co-signer. This also isn’t ideal because you have to ask your parents or someone else you trust (and who trusts you) to co-sign on a card with you. This person has to agree to be liable for the account if you don’t pay. This can be a headache because you have to make sure the co-signer has good credit, and real talk, even our parents can be terrible when it comes to money.

Best of luck! I’d probably go with the secured card because having the bank hold $500 for a year sounds like no sweat to me, but now you have other things to consider.


Photo: Flickr/IvanWalsh


15 Comments / Post A Comment

mishaps (#65)

Go for the secured card. Consider it an interest-free loan you are making to 2013 You. Put one bill like your phone or the electricity on the card, set the card to auto-pay from your bank account, and put the card in a drawer and ignore it. A year later, you have a great credit score, and your $500 back.

Thanks, Mike Dang!
My other gripe about a $500 secured card is that I could have it somewhere else, *earning* interest, rather than letting my EvilBank get it for free. Sigh. I guess it’s time to bite the bullet.

@quadrilaterals Even if you think of it that way, what does a good high-yield savings account pay? Like 2%? That $500 would only earn $10 in that case, so call $10 the price of establishing a credit history. Blammo, a credit card for the price of a cocktail.

Dancercise (#94)

I got a secured card at the age of 24 for my first card. Yeah, it sucked having to send them $500, but it was really nice to get it back a year later! And, at that point, I was able to triple my credit limit just by asking.

Also, I tried many, many times to get store credit cards and was always denied for having no credit history.

kellyography (#250)

I also got rejected every time I tried to get a store card! They’d be all, “Hey do you want a store card?” Me: “Sure, totally!” Them, 10 days later: “Ohh, sorry, we shouldn’t have offered that to you; turns out we don’t want to give you one after all.” Repeat ad nauseum, for like 5 years.

I have always had just the one credit card, with a very modest limit, which is plenty for me.

Mike Dang (#2)

@kellyography + @Dancercise This is probably for the better! Store credit cards are really terrible.

Katzen-party (#219)

@Mike Dang + @kellyography Also, if you get rejected for credit a bunch of times–as in, applying for a bunch of store credit cards–it looks bad on your credit report. I work for a retail establishment that extends conditional sales contracts (basically, credit for a one-time purchase of specific fairly high-priced items) and when we run credit checks, we use that as kind of a red flag when people are repeatedly denied credit for relatively low-limit cards.

So, yeah, I think the secured card is better. It seems like an insult and a pain, but if you play it the way @mishaps suggests, it’ll be worth it.

roseds (#475)

@Katzen-party Yes, I did not know that this was the case and once tried to apply for like, four credits cards in a month. They all show up on my credit report now. I think they will be off next year.

Another option to consider is a student credit card. I got mine from the same evil bank that tricked us all into opening checking accounts during orientation week (they also had the only ATMs on campus). So I already had an account with them, which was maybe a factor. I applied while I was in grad school (though I think they are MAYBE supposed to be for college students, and I was only in grad school part-time, and other potential small adjustments I might have made on the survey, etc.), and I got a card with a $3000 limit that I did not have to pay up front.

Trilby (#191)

There was a hilarious sketch on SNL many years ago where the Quaid brothers wanted to talk to the naughty lady but didn’t have a Visa card. Here’s what they did: watch!

Tuna Surprise (#118)

Get the secured card. I remember trying to rent a car once without a credit card and it’s a huge hassle.

pearl (#153)

Strange, I got my first credit card at 18 with no credit history for Amazon. Maybe before you sign up for one, check credit karma or credit sesame or even (if you want to use your annual free credit check) to see that you, in fact, have no credit history… No student loans or anything even? Credit Karma could also suggest cards that are good for you/your score, if it exists

selyse (#497)

I applied for a secured card with Citibank and they put my $500 in a CD, so when they “unsecured” my card after a year, I got about $60 back in interest.

muush (#521)

“With a secured card, you have to give a deposit of at least 100 percent of your credit limit.”

That’s not always true. I was in the same situation as the LW and applied for a secured credit card with CapitalOne. I deposited $99 and have a credit line of $200. If I want to get an increase, all I need to do is deposit more.

xylophones (#1,174)

I know this is late, but I searched the Billfold for help as I always do in financial situations I find myself in I don’t know what to do with, which is pretty much all of them. Can you guys recommend some secured cards? I saw the Capital One one had a lot of bad reviews but I don’t know what else to do.

I applied for a regular card with Chase, where I have my checking account, and was rejected for having no credit history (I have a steady job with good income and lots of money in checking which the lady on the phone told me made it likely I would get approved…I guess not). Should I wait a few months before trying to get a secured card then?

max (#6,196)

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