At the time of applying for a credit facility such as loans and credit cards, the lender would ask for your credit score. In general, the credit score above 750 is considered to be the entry card to be eligible for a loan and credit card.
The credit score of the individual can get her the best credit cards, however, those who do not have any credit history or score, still have some options. In this article, we will talk about the list of options for people who have no credit.
Credit Cards for people with no credit?
There are many people who are new credit appliers so having no history does not stop you from using a credit card. If you apply for credit card, banks and lenders would take into account your income and employer category in order to check whether you are suitable to use that card or not. However, better deals will be out of their reach. There is another option that you can choose a secured credit card as well.
What is a secured credit card?
A secured credit card is the type of card that is for the people who have fixed deposit account in a bank. The credit limit for this card depends on the set limit by the bank. The credit limit you get on this type of card is equal to the amount in your fixed deposit account. For instance, if you have Rs. 1,00,000 in your fixed deposit account, your credit limit would be the same. But, you also need to be careful that you are regular with your credit card payments otherwise the bank will deduct the amount from your FD account. The same is the case for any penalty as the bank will have the authority to deduct the money from the attached FD.
Who are eligible for Secured Credit Cards?
A secure credit card can be availed by individuals who:
- Are not employed
- Have a monthly income that is lower than the minimum income cap, set by the bank
- Have a low CIBIL score
- Is working in a ‘blacklisted company’, as specified by the bank
- Is residing in an area that is in the blacklist
What else can you do?
When you own a credit card or there is any loan you have taken, your credit history has started to develop. If neither of the two situations is yours, you should then start following different measures to create your credit history and build a good credit score. Below are the simplest ways to do it.
Start working: If you are unemployed, how will you pay your debt? You must be an employed professional as the credit card lender would ask for the employment proof to process your credit card application.
Sign up for a checking account: Banks would want you to have a backup account on your application, and having access to a checking account helps you develop discipline and learn good credit habits.
Be responsible: The only way to build a credit reputation is to be a responsible credit card user for a while.
How can use your credit card responsibly?
In order to use your credit cards responsibly, you can follow the below-mentioned steps:
- Use your card for smaller expenses like groceries and gas.
- Don’t carry a balance as you begin to build your credit history. Pay your account in full every month. Also be sure you make every payment by the due date. This will establish on-time payment habits and keep you from paying interest.
- Spend small, but spend consistently. The more active your credit account is, the better your credit score will be.
- Stay within your budget, don’t get near your limit, and keep a tight rein on your spending.
- Know what your APR is. Many banks are eager to lure you in with terrific offers like 0% interest for the first few months – just be sure you know how long your introductory rate is going to last. The ongoing rate will usually be significantly higher.
Thus, with all the above information, you can see that credit cards for people with no credit history is a possible thing.