Without any credit history, an individual might find things a bit hard. There is very limited credit line available for someone who doesn't have a credit history. This is because someone without a credit history is a risky prospect and may default on the debt at a later stage. But there are some cards which are offered to individuals without any credit history and hence can be used to establish good credit over a period of time, moving on to better options.
These are cards which represent no risk to the companies which issue the cards. That is why they are offered to customers with no credit history. In this case, the individual pays an upfront deposit in their account and gets a card. This card could be used similar to the way a credit card is used. The only difference is that the customer is spending his or her money instead of borrowing from the bank. The card company might levy a fee on the card for activation or transaction. Usually the money that the individual can spend using the card is less than upfront deposit. The customer can continue using this card month after month by paying the amount spent or replenishing the account. There are some reliable prepaid card companies which do not charge exorbitant fees and hence can be used for a start to build credit history.
In secured credit cards
, the customer deposits collateral in the account and gets a card which can be used like a credit card. The customer will have to pay the monthly bill to keep the account going. If that is not done, the money deposited originally will be taken by the card company. Secured credit cards represent lower risk for the card issuers, which is why the interest rate is low for the secured cards compared to unsecured credit cards.
Student credit card
Students usually do not have a credit history to start with. But they have to build one before they get out of college. They have a steady stream of income and lot of expenses too. This qualifies for a credit card and if they use it responsibly, they will develop a good credit history. student credit cards
usually have age restrictions. Also student credit cards need a co-signor which means guardian or parent of the student with an established credit should vouch for the student. If a student doesn't handle the card responsibly and doesn't pay the bills regularly, the co-signor's credit history will also be tarnished which is why both students and parents should be careful.
Cards at gas stations
You can obtain cards at gas stations, grocery stores and super markets too. The interest rates on these cards are quite high but are a good option for those with no credit history. However, customers must ensure that they buy cards only from those gas stations and grocery stores which report the credit to the credit bureaus. Otherwise the activity on the card will not benefit the customer at all.