Explore the Best Credit Cards for No Credit

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Does No Credit History Mean You’ve Never Had Any Credit?

Just because you don’t have a credit history does not mean you’ve never had credit. As confusing as it sounds, you can have experience with credit in the past, yet still have no credit history to FICO or VantageScore.

No credit means you have no recent credit history. Those without a past credit history (within the last seven to ten years, will find themselves lumped into the same “no credit” category as those who are entirely new to credit. So even if you have borrowed money in the past, you may have no score.

FICO, VantageScore and Credit History

Different credit scoring models have a different definition of no credit history.

FICO requires the following to establish a credit history:

• One tradeline reported within the previous six months. A tradeline is also known as a credit account.
• A tradeline at least six months old,
• Proof that the account holder is alive.

VantageScore, on the other hand, does not have as strict requirements for establishing a credit history. The VantageScore model only needs one month of credit activity to generate a credit score. This makes the scoring system popular with those who want to judge the recent credit activity of an applicant.

Regardless, if you don’t satisfy the requirements above, you might not have a credit score.

Is No Credit Score the Same as Bad Credit?

So, if you have no credit, what is your score? In the same vein, no credit history does not mean you have a bad credit score. It merely means the scoring models don’t have relevant enough, recent information from an accurate assessment of your risk.

You may have an excellent history of paying off your credit card or loan balances in the past. Maybe you even paid off all your student loans. You may also have a history of non-payments and defaults. Or, you might have no practical experience with credit at all.

According to Experian, one of the largest credit reporting agencies, very few people with a credit past have a score below 470. Around 99% of Americans with a credit score have one above 470, which is good news if there is a correlation between your lack of recent credit history and bad credit.

Why Credit Matters

There are approximately 45 million Americans with no credit history, according to recent statistics. With so many lacking a credit score, you might wonder why your credit score matters?

Credit influences many aspects of our daily financial and personal lives. People with excellent credit scores enjoy greater access to credit, higher credit limits, and lower interest rates. That’s because they have proven their financial responsibility and trustworthiness to lenders.

Those with poor credit, however, will struggle. Bad credit scores can impact every aspect of your life.

A poor or bad credit score can cause the following difficulties in life:

• Trouble Renting: With bad credit, you can struggle to find an apartment. Because landlords and rental agencies look at an applicant’s credit report, a bad score can indicate you are a potential risk for missing rent payments. This can lead to rejections when applying for accommodation.
• Loss of Job Opportunities: Employers can also access your credit report. While they won’t see your score, they can see past remarks on your credit report. These can make you a risk for employment, as they might deem you untrustworthy.
• Poor Credit Choices: People with bad credit struggle to find good credit products at reasonable rates.

Given the difficulties that those with poor credit experience, imagine how much more difficult it is with no credit.

Without a credit history, you will struggle to find many lenders willing to take a chance on you. You likely won’t qualify for a mortgage, a personal loan, or possibly even a car loan. That’s why it is so critical to take steps to build your credit score quickly, so you can enjoy many of the benefits good credit scores offer.

How to Build Credit History

Building a credit score requires time and patience. There are, however, specific steps you can take right away to improve your score in as little as a few months.

Getting Started with Credit Repair

First, you need to establish a credit history. The easiest way to do this is by getting a credit card. Getting a secured card is the most straightforward route and can make the approval process much easier. That’s because secured credit cards require a security deposit.

This deposit required, which usually starts as low as $200 and runs as high as $5,000, also acts as the credit limit.

Once you have a secured card, you can use that card to make small purchases. Then, once you receive your statement, you pay your bill in full. A few months of this practice can provide you a decent score (if new to credit) and increase a damaged score by several points.

Building Credit Takes Times

While short term improvement is possible, establishing a good credit score can take months – or even years. That’s because both VantageScore and FICO place significant weight on payment history with their respective scoring models.

FICO scoring places significant weight on payment history, as this is the largest sign of a person’s ability to repay any new credit. Nearly as significant is the amount of available credit that individual is currently utilization, or how much of the available credit line they use. VantageScore, on the other hand, emphasizes a variety of credit, though it also prioritizes payment history.

This means that it will take time to build a history of on-time payments. With patience, however, it is a very achievable goal.

Failing to keep up with payments, however, can cause serious harm to your score. With a young credit history, one missed payment can destroy your credit score. Even worse, late or missed payments stay on a credit report for seven years, meaning the harm carries on for some time.

The Best Credit Cards for No Credit History

Just because you have no credit history doesn’t mean you can’t build one. No credit score simply means you have a blank canvas on which to begin (or return) to your credit journey. If you find yourself wondering “I have no credit score, how do I get a credit card?” don’t worry – there are still options available.

The credit card options for no credit are limited, but that doesn’t mean there aren’t great offers available. Here are some of our top credit cards for no credit score picks for 2020:

• Best Secured Card with a Low APR: Green Dot primor® Secured Visa® Gold Card and First Progress Platinum Prestige Mastercard® Secured Card
• Best Secured Card for Those Brand New to Credit: Green Dot Visa® Secured Card
• Best Unsecured Card for No Credit: Group One Platinum Card
• Best Unsecured Card for Credit Limit Increases: Reflex Mastercard® 

Find the Best Card for Establishing Credit Today

The team at BestCards.com knows how hard it can be to find the perfect credit card for rebuilding credit, especially without the right tools and knowledge. That’s why we strive to provide insightful credit card reviews, as well as informative articles and advice to guide you. Take advantage of these resources and more to find a trusty credit-building card today!