While applying for a loan or a credit card, not only the fact that you have bad credit will work against you, but also absence of credit will hamper your attempts. You may not like it, but the business of consumer credit works in this fashion. Lenders avoid lending to people with no credit history because of the absence of the track record of payments.
That means, you cannot rent a car, stay in a hotel, or shop online without a credit card. However, there are a few things that you can do to rectify the problem.
Available Credit Options
If you do not have a credit history, most of the larger credit card companies will refuse to issue you a card. But you can try the smaller players like department stores. Apply for a card from a department store that is ready to issue you a card. A gas station card is also a good bet. What is crucial is that you pay your bills on time. Aim to build a good credit history and not simply to get a credit card.
Choose a credit card company that will consider your overall financial situation and not simply your credit history. Some lenders will consider your employment history, your housing condition and how frequently you have relocated. If all these details are good, they can approve your application. But it is imperative to use the card sensibly.
Credit Unions
If you are an existing member of a credit union or fulfill their membership criteria, find out their terms for issuing the card. Though they do not issue the cards blatantly, their terms for the members are more relaxed. There is no need for you to be employed by a particular company to be eligible to become a member of a credit union.
Secured Credit Cards
A credit card whose limit is equal to or slightly more than the cash deposit you have to give to the issuer as a security is called secured credit card. If you pay your bills on time consistently, the lender will usually increase your limit without asking you to pay further deposit. Once the lender becomes secure in the knowledge that you are a reliable customer, you can opt for the unsecured credit card.
Student Credit Cards
For a student, a student credit card is the best bet. Student credit cards are the excellent method of developing the credit history that is essential for availing further credit after graduation. But it is crucial that you utilize the opportunity sensibly. Many banks, especially those present in college or university cities and towns, will offer a credit card to the students.
Once you get a credit card, never forget that you are setting up a credit history. Prove that you are a safe financial bet by paying your bills on time. Do not overspend as it can drag you down into debt and worsen the situation.