A first credit card without credit history is necessary to improve your credit score and start your credit file from scratch. This will help you build your credit score over time. The Ascent has put together a list highlighting the top credit card issuers who offer this type credit card.
Get rewards for your first credit card
If you have no credit history or a bad credit score, you can apply for a Discover rewards credit card to help you build a good credit history. As long as you pay your bills on time, you can upgrade to an unsecured card with no annual fee or foreign transaction fees. This card also waives the late payment penalty fee for the first time you use it.
Discover has a range of rewards credit cards that are suitable for different financial situations. While many cards don't offer any one-time bonuses or other benefits, they do offer double cash back within the first year. This is an important benefit, especially when you use the card well. You also get unlimited earning potential, flexible rewards redemption and 0% APR for fourteen months.
Discover gives you the opportunity to earn rewards from every purchase. You can use the cash you earn to redeem for statement credits and cash. You can redeem your rewards online as well as by phone. There is no minimum redemption amount and you can redeem your rewards at any amount that you choose. You can also redeem all of your rewards at once. Cash redemptions can be made in any amount, but credit must still be maintained.
Secured credit cards
Secured credit cards are a great way to start building a credit history. You won't be denied for having derogatory marks on credit reports, unlike unsecured credit cards. This allows you to have a better chance at approval. It also means that you can avoid interest rates, which can seriously damage your score.
A secured card also offers other benefits. Many of them offer credit score tracking and rewards programs. Some of them also offer cash back rewards. The rewards are generally modest, at most 1%, and you will get a check at each end of the calendar year.
In order to qualify for a secured card, you need to put down a deposit, usually a few hundred or thousands of dollars, to secure the card. The annual fee can also reduce the balance. A $400 deposit will allow you to spend up to $400, but a $75 annual fee can reduce this down to only $325.
Shop cards
To encourage loyalty and increase revenue, department stores offer credit cards. They also give credit card users incentives to shop at their stores, including cash back and other benefits. You should be familiar with the requirements to apply for these credit cards before you do.
Store credit cards are usually offered by department stores with low credit limits. But, these cards could lower your credit score by increasing your utilization rate. Credit scoring models consider the utilization rate of your cards. Therefore, a store card with low credit limits can affect your credit score.
For people with poor or bad credit, department store credit cards are a great option. In addition to offering a variety of rewards, these cards are easy to obtain. To apply, you must be 18 years old with good or fair credit. If you don't have credit history and are applying for store credit cards, be aware that they often require a hard screening. For instance, when applying for a JCPenney credit card, you'll be asked to provide information about your income and housing costs.