Young people usually have limited credit history because they have no experience in making bill repayment yet. It is possible to find a few credit card companies that will approve you even though most of the credit cards in the market require at least an average credit score. The first step is to review your credit report and check the credit score. While reviewing the credit report, you must look out for any error that is mistakenly entered into the record on your credit report. Checking your credit report is very easy and only takes a few minutes.
One option for people with limited credit history is to sign up for a credit card designed for people with limited credit history. The downside of credit card designed for limited credit histories is the high interest rate which often exceeds 20%. The purpose of charging the high interest rate is to protect the credit card issuer in case you neglect to make payment. Besides the high interest rate, you also have to check whether it has annual fees. Capital One offers many credit card for people with limited credit history without charging annual fee or foreign transaction fee.
Applying for a credit card online is the easiest for people that lack credit history. You should go ahead and fill in the form if you found a card that will approve people with no credit history. The approval decision usually will be emailed to you in 1 – 2 days. Once you are approved for the card, make sure you use it responsibly and always make repayment punctually. Making repayment punctually for 6 months – 1 year allows you to qualify for a higher credit limit.
Another option is to apply for a secured credit card. Secured credit card requires you to put in a security deposit of at least $200 or more. When the card is approved, the credit limit will be the same as the amount of security deposit you put. The security deposit will be deposited into a bank account and the amount will be deducted in case you forgot in making repayment on the due date. Secured credit card can be upgraded to a regular credit card if you make consistent repayment every month.
Secured credit card is like a debit/prepaid card but you don’t have to deposit money into the card to use it. Instead, when you fail to make repayment, they will deduct the amount from your security deposit. When looking for a credit card, it is important that the credit card company will report to at least 1 – 2 credit bureaus so that your credit score will build up as you diligently keep up with the bill payment.
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