No one is born with borrowing experience, so that's why there are bank cards for people with no credit history. Getting one of these cards is an opportunity to establish a credit history, yet these cards are not as easy to find as they used to be.
About Bank Cards for People with No Credit History
People who have never had any type of credit account before do not have histories at any of the big three credit agencies, so that makes it difficult to calculate the statistical odds that these consumers will pay their bills on time. If you can demonstrate income, or line up a co-signer, you can get a reasonably affordable deal on a card. If you don't have either, and are under the age of 21, you won't be able to get a credit card.
Federal laws passed in 2008, and that went into effect early in 2010, limit the practice of granting credit cards to people under the age of 21. The legislation requires underage people applying for credit cards to demonstrate their ability to repay debt or have an adult co-signer agree to accept joint responsibility for the account. Not all credit card issuers even offer accounts with the cosigner option, and several are reconsidering whether to continue marketing to college students at all.
Cosigners don't get charging privileges on the accounts, despite having responsibility for the monthly bills. Any unpaid bills remain the cosigner's responsibility into perpetuity, well after the point that a credit card company decides to close an unpaid account. Because of the potential impact upon cosigners' own credit reports, parents and other guardians should think carefully before agreeing to cosign. In the future, cosigners might gain the option of waiving their responsibility for the main cardholder's account when that individual turns 21.
Over 21 and Still No Credit History
People who are 21 and over without a credit history have an easier time obtaining bank cards. These applicants would do well to include documentation of their financial responsibility and stability with applications for accounts, in order to obtain more favorable interest rates. The more proof of financial stability an applicant has, the better. Documents to include with credit card applications include:
- Bank statements: Provide evidence that you maintain a checking or savings account balance in positive territory for a sustained period of time.
- Proof of income and employment history: This is one of the reasons why you want to save copies of tax returns and paycheck stubs.
- Consistent residency: Tax returns show where you've lived as do copies of leases, letters from landlords and utility bill records.
- Good bill payment practices: Documentation of accounts with cell phone providers, cable television companies and other utility companies could show that you continue to meet financial obligations.
- Student loan documentation: While you're still a student, financial aid doesn't do much to help your credit history, but once you've graduated, the clock starts ticking for repayment of the debt.
- Auto loan information: If you've bought a car yourself or with help from your parents, documentation of loan payments will support your application for a credit card.
Cards Still on the Table
In the aftermath of the stricter legislation, many of the card products that remain available to people with no credit histories happen to be prepaid accounts or debit cards. A debit card provides direct access to the accountholder's checking or savings account at a bank and can be used like a credit card, often with the use of a personal identification number. These cards can withdraw money at automated teller machines and branches of financial institutions. A prepaid card resembles a debit card, but requires the accountholder to maintain a minimum amount of money on deposit that becomes the maximum amount that can be charged or borrowed with the card.
Bank cards for people with no credit history include:
- Capital One No Hassle Cash Rewards Credit Card
- Capital One Classic Platinum Credit Card
- Capital One Standard Platinum Credit Card
- Account Now Gold Visa Prepaid Card
- First Premier Bank Classic Credit Card
- Ready Debit Visa Prepaid Card
- Centennial Classic Credit Card
- NetSpend Visa Prepaid Card
- Capital One Reloadable Prepaid MasterCard
- Aventium Classic Credit Card
Giving Credit Where It's Due
The credit card industry is still absorbing the changes dictated by new legislation, and that means trends in these accounts are just beginning to take shape. For people with no histories of borrowing, time will tell as to whether credit cards will remain difficult to obtain.