How beginners with no credit can obtain a credit card
If you're new to credit, your credit card options might be limited. However, a secured credit card is an excellent option...
What’s the best type of credit card for people with no credit?
Secured credit cards are designed for individuals new to credit or with limited credit history, like students, recent graduates, immigrants, or those rebuilding credit. This often means they don’t require a traditional credit check or a specific credit score for approval, which makes them easier to get. If you don’t meet the criteria for a traditional credit card, a secured card can also help you rent a car, book a hotel, or make any other transactions that require a credit card. Plus, using your secured card regularly can help you build and improve your credit over time.
What’s a secured credit card anyway?
A secured credit card is a type of credit card that requires a refundable cash security deposit, which directly sets the card's credit limit. Unlike traditional credit cards, where the limit depends on creditworthiness and income, a secured card's credit limit is usually the same amount as the cash security deposit. For instance, a $100 deposit will give you a $100 credit limit.
Obtain a secured credit card in five simple steps
If a secured credit card sounds like the right choice for you, follow these five steps to apply:
Step 1: Determine how much you can afford
Because secured credit cards require an upfront cash security deposit, assessing your finances before applying is crucial. If you need help deciding how much to put down, starting with a smaller deposit, like a couple hundred dollars, is always a good approach. As you build confidence, you can add more to your deposit to increase your credit limit over time.
Step 2: Research and compare different cards
After determining your budget, research various secured cards to pinpoint which features matter most to you. When selecting the right card, compare deposit requirements, fees, interest rates (APRs), rewards, and potential upgrade paths. To get started, you can contrast card features like those highlighted on our homepage.
Step 3: Consider a secured card with no credit check
Once you’ve narrowed down your options, it’s time to choose a card. We recommend selecting a card that doesn’t require a credit check. A credit check can decrease your likelihood of approval. It could even have a potential impact on your credit score if checked during the application process. Ensure the card company reports your credit activity to all three major credit bureaus (Equifax, Experian, and TransUnion). If you're an immigrant, verify your eligibility to apply.
If you’re considering opening a secured credit card with opensky, all three of our options feature an 89% approval rate1 and do not require a credit check. See which one best suits your needs.
Step 4: Apply for the secured card of your choice
You can apply for a secured credit card online through the card issuer's website. Be sure to have this information on hand:
- Full legal name
- Social security number (SSN) or individual taxpayer identification number (ITIN)
- Street address
- Phone number
- Employment status
- Annual income before taxes
- Housing costs (rent or mortgage)
Step 5: Fund your card
Keep in mind that, in addition to the cash security deposit, additional fees, such as application, processing, or annual fees, may be required to open your account. You can pay these with a debit card, so make sure you have enough funds to cover the total amount owed.
Be responsible to increase your credit score
Once you’re approved and your card is activated, using it responsibly can help you build a strong credit history and boost your credit score. Here are the actions you can take to set yourself up for success.
1. Make small purchases every month
Using your secured card regularly and paying off the balance on time is critical to building your credit. To establish your credit history, start with small purchases, such as paying for a monthly streaming service subscription.
2. Keep your credit utilization low
Your credit utilization ratio is the percentage of available credit you currently use. Aim to use 30% of your available credit limit at most. This shows lenders that you can stay on top of your spending, which can help raise your credit score.
3. Pay on time
Always pay your credit card bill on or before the due date to avoid late fees and negative marks on your credit report.
4. If you can, pay your balance in full
Carrying a balance on your card can increase your credit utilization ratio, which might lower your credit score. If you can't pay your bill in full each month, try to make the minimum monthly payment and pay down the balance as quickly as possible.
If you're a beginner with no credit score, secured cards are a great tool for building credit and showing responsible credit use. After establishing and growing credit, more credit options can become available. Now is the time to start.
1 Based on Q1 2024, opensky Secured Visa® Credit Card average approval rate is 89.35%. Individual approval results may vary.
Takeaways
- Secured credit cards are designed for individuals new to credit or with limited credit history, like students, recent graduates, immigrants, or those rebuilding credit.
- Unlike traditional credit cards, where the limit depends on creditworthiness and income, a secured card's credit limit is usually the same amount as the cash security deposit.
- Once you’re approved and your card is activated, using it responsibly can help you build credit history and boost your credit score.
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Frequently asked
What is a "secured" credit card?
A secured credit card requires a one-time refundable security deposit to open and is equal to your credit limit. For example, if you deposit $100, your credit limit becomes $100. The beauty of the opensky secured credit card is that you can open an account without undergoing a traditional credit check. This is especially beneficial if you have a poor credit history or no credit history at all.
How much will a secured credit card raise my score?
Your rate of improvement depends on a few factors, including your current status, payment habits, and your management of this and any other lines of credit. Opensky is designed specifically to help people improve their credit fast, with an online/mobile app and tools like alerts to help monitor your account. Plus you will get considered for credit line increases that turbocharge your growth.
How can I obtain a copy of my credit report?
Federal law states that you can get a free report from each of the three nationwide consumer credit reporting companies - Experian®, TransUnion® and Equifax® - once every 12 months. Don't be fooled by offers from companies to pull your credit report or websites that ask for payment to see your credit report; only https://www.annualcreditreport.com/index.action is the official site authorized by the Federal government.
Is there an annual fee for this card? Are there any hidden charges?
Yes, there is a $35 annual fee for the opensky Secured Visa® Credit Card. There is no annual fee for the opensky Plus Secured Visa® Credit Card. Opensky believes in being upfront. There are no hidden fees or charges. All of our pricing and fee information is transparent and can be reviewed (See cardholder agreements at the bottom of this page).
What is a "credit limit" and how is my credit limit decided?
A credit limit represents the maximum amount you can spend on your credit card subject to approval. You decide the deposit amount, which directly determines your credit limit. It can range from as low as $100 to as high as $3,000, depending on the card you choose. The goal is to ensure you can manage payments effectively and succeed in building your credit! *All applications are subject to approval.
