Understanding Credit Cards For People With No Credit To Build Credit
A lot of people have poor credit and then there are those with no credit. There are many reasons why people get themselves into this situation. This can cause major problems when it comes to securing a cheap mortgage or any other kind of loan. It’s very frustrating to have your dreams slip through your fingers because of your lack of credit score. Unfortunately when a lender is thinking about whether you are a suitable candidate for a loan they will look at your credit score along with other factors such as your income. However the credit score plays a very pivotal role in securing credit.
This is why people need to understand the techniques that can be employed to raise your credit score. Taking out a credit card especially for people in your situation can be a very good way of rebuilding your credit. However you need to know exactly what you are doing otherwise you might actually make things even worse for yourself. So do your research so that you are informed of what options you have to hand.
First of all you need to ensure you have some sort of bank account. You don’t need to have a lot of money in it, just the minimum amount that is required which could be as low as $5 depending on which account you open up. Most people go to their bank however you should also look at your local credit unions which often act as a good alternative. Having a bank account shows the credit card issuers that you have stability.
Normally with credit cards you get what’s called an unsecured credit card. When any kind of credit is unsecured it means that if you fail to keep up your repayments, the lender cannot simply come round to your home and take your belongings away. This means it’s a higher risk for the lender and it’s also why those with no credit find it so difficult to get unsecured credit. If however you took out a credit card that was “secured” then there is a lot less risk for the card issuer. In the case with secured credit cards you need to place an amount of money as a deposit. The more money you add in the more you can spend on your card. Not all banks offer secured credit cards so you will have to shop around. Please don’t get confused with “prepaid” credit cards because they won’t actually help you rebuild your credit. If you want to rebuild credit it’s a secured credit card you want to apply for.
For many people with no credit score, it’s because they are young college students and have never had a credit card before. If this is the case, you might not want to apply for a secured credit cards. Instead of looking at secured credit cards you could look to see what cards are being given out specifically to students. You can either do a search on the internet or enquire with your college campus. Plus, they are normally easier to apply for. Often you don’t even require a minimum income or cosigner. There are also plenty of cards that offer benefits such as reward points, no interest for the first 6 months and low APR if you consistently pay on time. So it’s worth checking out the different deals to see which one you could benefit from the most.
If your parents have a good credit rating you could ask to become a card holder on their account. You will need to provide your financial details however it can be a good way to build credit without you needing to be the main account holder. Just make sure you are a responsible card holder and don’t do anything stupid with the card that will get your parents into a bad financial situation.
Remember, if you want to rebuild your credit rating you need to be a model citizen by keeping up with your repayments. There’s no point in applying for credit cards to rebuild your credit if you are going to end up not paying all of your bills on time. Also, there are loads of other tips that should be look at for the purpose of rebuilding credit so have a look at as many of them as you can to see which ones might be applicable to you.
