How to Qualify for New Credit with No Credit Score
It is a very difficult position to be in when you don’t qualify for new credit because you don’t have a credit score and you can’t get your credit score because you have no credit history. It’s a typical catch-22.
All is not lost, however, since banks know the struggle it can be to get a credit card for the first time. To get a credit score, you will need to have an active account for at least six months on your credit report. Some banks are now offering special credit cards to people with no credit.
There are other ways, however, to improve your chances of qualifying for credit when you don’t have a credit score. Here are 6 ways you can do this:
1. Get a Job
In order to repay a loan or credit card, you need to prove that you have a steady income. You cannot use someone else’s income to apply like your spouse or parent, it must be your personal income.
The limit you will receive for your credit card will be based on your income and the percentage of your income you can allocate to your repayments. Thus, if you have a higher income, you are more likely to qualify for a credit card with a higher limit that if you earn a lower income.
2. Prequalification for Credit Cards
Prequalifying for a credit card is a possibility to determine if your credit profile will allow you to get a credit card in the future.
A prequalification is what is known as a soft credit check which won’t affect your credit score the way a regular application would. If you follow through with a successful application, it could hurt your score a little.
3. Apply for Store Cards
Retail stores are known for offering store credit to people with no credit history. While they tend to have high-interest rates and low limits, they are a great way to kickstart your credit history without a bank-issued credit card.
Be sure to keep the balance low to avoid owing too much interest. These cards are limited though in that you’ll only be able to use them in that particular store.
4. Student Credit Cards
Starting to get a credit rating while you are a student is a good way to begin your credit journey. A student credit card is the way to do it. These are specifically designed for students who have low incomes and no credit history.
Be careful when applying that you don’t select a card with a high-interest rate and ensure that you are able to pay the monthly installments when you start using the credit account.
5. Get a Co-Signer
If you are not in good standing to get credit on your own and know someone that has good credit that is willing to help you, you can go the route of a co-signer. What this means is that you apply for the card together, and if you default on payments or can’t pay it off, they become responsible.
Additionally, this will negatively affect their credit score too. So, applying for credit with a co-signer is something that needs to be carefully thought out before opting to have someone else involved in your finances.
6. Get Authorized Usage on Someone Else’s Credit Card
Having yourself added as an authorized user on someone else’s credit card is another route to take to build up your credit. However, it is a risky practice.
It is similar to co-signing, except now you both become responsible for the account. Be sure that if you are going to go this route that it is with someone you trust, since you could be responsible for the full repayment if they can’t pay or suddenly skip town.