Best Credit Cards for No Credit History | Fall 2020

Best Credit Cards for No Credit History | Fall 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

Navigating through credit card offers without a credit score can be a daunting task. Often, the offers that appeal to us the most are ones that are reserved for people with average or excellent credit scores. According to the Consumer Financial Protection Bureau, 45 million consumers in the United States do not have a credit score. In order to help this population, we looked through many different credit card offers to find the cream of the crop, and then narrowed those down to the cards that can be obtained with no or limited credit history.

Best credit cards for no credit

After reviewing hundreds of credit cards, we selected the cards in this article as our picks for best credit cards for individuals without a credit history. Our choice is based on a combination of quantitative factors, such as net rewards rate and value of bonuses, as well as qualitative considerations like whether or not cards report your credit score to the credit bureaus.

Up to 1.5% cash back after making 12 on-time monthly payments, 1% cash back on eligible purchases - right away : Best rewards credit card for no credit history

Petal® Visa® Credit Card

  • On Petal's Secure Website

$0

12.99% - 29.49% Variable

Fair/Limited

  • No fees whatsoever. No late fee, international fee, annual fee, or any-other-kind-of-fee, fee
  • Up to 1.5% cash back after making 12 on-time monthly payments
  • Variable APRs 12.99% - 29.49%
  • 1% cash back on eligible purchases right away
  • Up to 10% cash back from select merchants
  • Build credit alongside tens of thousands of Petal Card members
  • Cash flow technology may help applicants without credit history get approved
  • $500 - $10,000 credit limits
  • Petal's mobile app makes it easy to manage your money, track your spending, and automate payments
  • See if you're pre-approved within minutes without impacting your credit score
  • Petal reports to all 3 major credit bureaus
  • No deposits required
  • Card issued by WebBank, Member FDIC
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Why it’s useful if you have no credit: Earn Up to 1.5% cash back after making 12 on-time monthly payments, 1% cash back on eligible purchases - right away offers much better terms than the typical card geared toward consumers with limited or non-existant credit histories. The card has a $0 annual fee and it offers at least 1% cash back on all your purchases. Furthermore, by making your payments on time for 12 months, you can work your way up to 1.5% cash back. The card also offers higher-than-usual credit limits for entry-level applicants, making it a great option for jump-starting your credit score.

What to be careful of: As a part of the approval process, Petal may ask for a link to your bank account. While this may be a privacy concern for some applicants, Petal does guarantee the security of your personal info, plus this enables Petal to consider other factors outside of your credit history to qualify you for the card.

Highlights

  • Tiered earning rate that incentivizes you to pay your bill on time
  • Petal looks at several factors outside your credit score to determine your eligibility for the card.
  • Higher-than-usual credit limits, ranging from $500 to $10,000.
  • No fees whatsoever.

Discover it® Student Cash Back: Best option for students with no credit history

The Discover it® Student Cash Back is one easy-to-get option when you have a thin credit profile — without sacrificing reward value. The card provides users with 5% cash back in categories that change each quarter like gas, restaurants, wholesale clubs and more, up to the quarterly maximum of $1,500 when you activate. For 2020, the categories include grocery stores, Walgreens and CVS (January-March), gas stations, Uber, Lyft and wholesale clubs (April-June), restaurants and PayPal (July-September), Amazon.com, Target, and Walmart.com (October-December). What makes this card particularly great for students is the statement credit for good grades. Those who sign up for the Discover it® Student Cash Back will get a $20 statement credit each school year their GPA is 3.0 or higher for up to the next 5 years. No other credit card we came across offers any rewards for performing well in school.

Why it’s useful if you have no credit: Once you graduate from school and you manage to build up a credit history, you can upgrade this card to the non-student version. That card is one of the best reward credit cards, and comes with a very similar reward structure. Just keep the account active by making a small charge on it every month or so. That will help build up what's known as the average age of your credit, further increasing your FICO score.

Highlights

  • Good Grades Rewards: $20 statement credit each school year your GPA is 3.0 or higher for up to the next 5 years

Discover it® Secured:

The Discover it® Secured is one of our favorite secured credit cards thanks to a rewards rate akin to offers typically only available to those with average credit or better. The card provides 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases - automatically, Discover will also double all the cash back you’ve earned at the end of the first year for new cardmembers.

Why it’s useful if you have no credit: Outside of being one of the easiest cards to be approved for, all Discover credit cards come with free FICO® monitoring benefits. Through the account website, you will be able to see your credit score increase as you pay your bills, and your age of credit increases. Once your credit score is high enough, you will be able to apply for a better credit card, and increase the rewards you earn.

What to be careful of: The one area where the Discover it® Secured is not great is interest. If you cannot pay off a balance month to month, we don’t recommend getting this card. The interest charges will overshadow any value you might experience from the rewards.

Highlights

  • 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases - automatically
  • Reports to all three major credit bureaus
  • For new cardmembers, Discover doubles the cash back you've earned at the end of the first cardmember year

SDFCU Savings Secured Visa Platinum Card: Easiest credit card to get for international travel

If you frequently travel abroad and would like a credit card to handle some of your expenses when there, the Savings Secured Visa Platinum Card will be the best choice, if you have zero credit. The card comes with a number of features that make it well suited for overseas use. First, it has 0% foreign transaction fees. Most credit cards will charge a 3% fee for every swipe of the card that goes through a foreign bank. If you frequently use your credit card on your travels, this can produce significant savings over time. The other good feature that comes with the Savings Secured Visa Platinum Card is its chip and pin EMV technology. Most cards in the U.S. are issued with the chip and signature variant, which will not work in certain countries. With chip and pin enabled, you can sue the Savings Secured Visa Platinum Card pretty much anywhere in the world.

Why it’s useful if you have no credit: The Savings Secured Visa Platinum Card is one of the few secured credit cards to come with a reward program — something that is not common for people with no credit scores. The card reports your credit activity to all three credit bureaus that will, over time, help establish your credit score.

What to be careful of: The SDFCU Secured credit card cannot be upgraded to a non-secured credit card. That means you cannot get your security deposit fully refunded, unless you close down the account completely. If you choose to shut down your account in order to get your deposit back, your credit score will also take a hit. The other consideration to keep in mind is that you need to be a member of the SDFCU in order to apply for the card. Employees of the Department of State can get this for free. You can also qualify by getting a lifetime membership to the American Consumer Council — the cost of this is just a one-time fee of $15.

Highlights

  • Chip and pin EMV technology
  • Low 11.99% APR
  • 0% foreign transaction fees

How to get a credit card with no credit history

If you have very limited credit history, there are a few steps you can take to help you open up a credit card account.

Apply for a secured credit card

The easiest credit cards to get with no credit history are secured cards. These credit cards require you to submit a security deposit that will act as your line of credit. If you fail to pay back your debt, the security deposit becomes forfeit. Before applying for a secured credit card, make sure the issuer reports your activity to any one of the three major credit bureaus. The whole point of secured cards is to use them to build or re-build your credit history. If the issuer doesn't report your timely payments, you will not move from square one. So if you put in a security deposit of $300, you can only charge up to $300 on the card and won't have any more room until you pay that balance down.

If possible, become an authorized user on someone else’s account

If your spouse or family member has an account they would be willing to put you on, this will immediately generate a FICO score for you, opening up your available options. However, like with secured cards, not all issuers will report authorized users to the credit bureaus. Ask the banker before applying and committing to this as a solution.

Apply in branch

By speaking with a bank representative, you increase your chances of getting approved for a credit card. A banker can work with you to double check for factors that can make you eligible for a card account. They can also help you call a reconsideration line if your application is initially declined.

Be willing to establish a banking relationship with the issuer

If possible, opening a checking or savings account with the issuer can also aid in obtaining a credit card from them. Because they want to retain you as a customer, a bank may be willing to relax the minimum requirements for their new credit card applicants. With some banks, such as Bank of America, having a checking account can also result in obtaining bonus spending rewards. Just watch out for checking account fees.

Have proof of income

Being able to show a credit card issuer a proof of steady income can impact your application approval odds. One of the major factors a bank looks at when deciding whether or not to issue a new credit account is the individual’s ability to repay the debt. Federal law mandates that the issuer be certain the account holder will be able to pay back at least the minimum amount due on the line of credit they issue.

Consider signing up for a store credit card

If all else fails, one option left to those with no credit history is to sign up for a card with a big retail store, such as Macy's or Target. Generally speaking, store credit cards are much easier to get than cards issued by banks. We caution everyone to read through the terms of such cards carefully. While they are easy to get, they are also notorious for having high APRs and fees. If this will be your first credit card, you should ideally look for one with no annual fee. Even if it doesn't have a great reward program, you can use it to establish your credit history. Make all your payments on time and keep credit utilization low. Within a year, you should be able to qualify for a better bank card.

Joe Resendiz

Joe Resendiz is a former investment banking analyst for Goldman Sachs, where he covered public sector and infrastructure financing. During his time on Wall Street, Joe worked closely with the debt capital markets team, which allowed him to gain unique insights into the credit market. Joe is currently a research analyst who covers credit cards and the payments industry. He earned a bachelor’s degree from the University of Texas at Austin, where he majored in finance.

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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How We Calculate Rewards: ValuePenguin calculates the value of rewards by estimating the dollar value of any points, miles or bonuses earned using the card less any associated annual fees. These estimates here are ValuePenguin's alone, not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

Example of how we calculate the rewards rates: When redeemed for travel through Ultimate Rewards, Chase Sapphire Preferred points are worth $0.0125 each. The card awards 2 points on travel and dining and 1 point on everything else. Therefore, we say the card has a 2.5% rewards rate on dining and travel (2 x $0.0125) and a 1.25% rewards rate on everything else (1 x $0.0125).