Posted by William Charles on December 11, 2014
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Published on December 11th, 2014 | by William Charles

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Starter Credit Cards – Best Cards For People With No Credit History

If you’re young or an immigrant to America then chances are you’ve run into the chicken and egg problem when it comes to getting credit cards. The card issuers want to see you’ve got a history of using credit cards responsibly before giving you one, but you can’t build a history of using them responsibly without getting one in the first place.

The traditional wisdom has been to start with a secured credit card or similar product. The downside to do this is that these cards largely have high fees and low or no rewards program. Secured credit cards are really designed for people with a negative credit history (a history of using these cards irresponsibly, e.g failing to make payments on time). People with no credit history are much better off trying to get what I like to call a “starter” credit card. These typically have low limits and are designed for people with little or no credit history.

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Best Starter Credit Cards

Below is our list of the best starter credit cards, these cards are those which I think are best suited to those with little or no credit history. You’re not guaranteed approval, but in general these cards are much more likely to approve you if you don’t have any credit history. Remember you can also see what cards you’re pre-approved or pre-qualified for by going here. None of the cards in this list come with an annual fee, allowing you to keep the card open for as long as you like. The sign up bonuses often change, so make sure you read our reviews to see what they are currently.

If you’re denied, always call the reconsideration line.

Credit card issuers have special departments or teams that deal with applicants that have been denied but want the card issuer to reconsider. You can find a full list of phone numbers for the reconsideration department here. If this is your first reconsideration call, make sure you read our tips first. This can be an extremely effective way of getting your first credit card.

 

Discover it

Our review

This card comes in at #2 and there is one main reason as to why. If Discover doesn’t approve you for the Discover it card, they’ll often give you the option to apply for the Discover it secured card. Most people will find that they are approved for the regular version of this card though, unless they have big derogatory items on their report such as bankruptcies.

Even though this is a starter card, the rewards program is actually pretty decent with 5% cash back in rotating categories and 1% cash back on all other purchases. This is another card that will give you a free FICO score.

[Read: When & How Often Does My Free FICO Score Update?]

AmEx Everyday Card

Our review

American Express created this card to cater to cardholders that don’t want to pay high annual fees and just want to use it for their everyday purchases. This card comes in third place for a couple of reasons.

This card also earns 2x Membership rewards points on grocery store purchases in the US (limit of $6,000 in spending per year) and an additional 20% bonus on all points earned if you have more than 20 transactions per month. Find out some cheap ways of increasing the amount of transactions you have each month.

[Read: Which cards earn at the highest rate on grocery store purchases]

Chase Freedom

Our review

Chase’s other basic starter card is the Chase Slate, but that card is really more targeted to people with existing credit (which is why you always see balance transfer offers for that card). The Freedom can be a bit more difficult to get than the other cards listed here, which is naturally why it’s lower.

Building Your Credit Responsibly

I do not recommend applying for more than one of these cards at a time.  It’s important that you understand how to build your credit in a slow and steady manner, here are a few rules to follow:

  • Never make a purchase on a credit card unless you can pay for it in full. A common mistake people make when getting their first credit card is to make a lot of charges on it that they don’t have money to pay for. “This is great, I can buy all this stuff!” when their bill becomes due and they see the high interest rate they immediately regret their decisions. Credit card debt can be rehabilitating due to the high interest rates, only put charges on your card that you can afford to pay for.
  • Stay slowly and build from there. If you don’t have any credit history and apply for twelve credit cards in one day, then chances are you won’t be approved for any of them. This makes it look like your under extreme financial stress, which is not appealing for lenders. Apply for one card, use it responsibly and then apply for another in six months or twelve months time.
  • Keep your credit utilization low when applying for new cards. A high credit credit utilization (the amount of credit you’ve used divided by the amount of credit you have available) is also a sign of financial stress and as such it causes your credit score to drop. Before you apply for any more credit, make sure you pay off any credit card balance. Even if you pay in full every month, you might still have a high credit utilization due to the reporting date being different than your statement date.
  • Educate yourself. Before making any financial decisions, you should be arming yourself with as much knowledge as possible. An informed consumer is a credit card issuers worst nightmare. Learn how the FICO score is calculated, always make sure you’re getting the highest sign up bonus and maximize your spend by getting different cards that earn at high rates in the categories you spend the most in.

Final Thoughts

Getting credit without credit history can be difficult, so I hope you find this list of starter credit cards useful. If you apply for any of these cards and don’t have a lot of credit history, then let us know if you get approved or denied in the comments. If you get denied, make sure you call the reconsideration line and see if you can’t change their name.

Also let us know if you don’t have any credit history and applied for a card not listed here and got approved. We will be adding more cards to this page over time, at the moment we have just listed the absolute highlights.

This post was a suggestion from ColinC on our post entitled “What’s A Blogpost Or Tool Which You Wish Existed But Doesn’t?”. Because we used his idea, he’ll receive a $5 Amazon gift card. Feel free to suggest your own topic idea over on that post and you could also win.



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San
San

You missed Harley-davidson no-fee secured card (from US bank), and journey credit card from Capital One (though 3 pulls, worth the try if you are not approved even for Chase freedom)

BTW, Chase freedom wants to see at least some history, YMMV.

ColinC

If you drop $X (I think it was 10k) into their accounts you’ll be able to get a special consideration application if the regular application gets denied. This is how my ex got a Freedom with no history.

ColinC

Forgot to mention you can combine this with the Checking/Savings Coupons.

Example:
Chase Coupon $200 for Premium Checking
Chase Coupon $200 for Savings total of $15k
Chase Freedom New Card Bonus $200
Chase Freedom Add Authorized User $25
= $625

JB
JB

Interesting post like always! I’m just a bit confused about 2 points:

1. According to the MyFico threads the Sallie Mae card is actually quite hard to get. It is a World Mastercard and hence subject to a minimum of $5k credit line, isn’t it? Same goes for the Chase Freedom being a Visa Signature and thus should be totally unavailable to no-history first timers…

2. There’s no mentioning of Capital One who actually offers a “no-hassle card for newcomers”. This was the first (unsecured) card I got after coming to America and I still have it as an upgraded Quicksilver since it’s my oldest card on the gun rack.

ColinC

I know someone with completely blank history who didn’t get approved however if you’re not approved for the World Mastercard you get the regular Mastercard, same with Chase, you’ll just get the regular visa card.

Eli
Eli

I just want to point out that I don’t think it’s necessary to only apply for 1 starter card and then wait for 6 months to a year until applying for more. Also I feel like the best way to start with credit from nothing is with a store card and definitely not the Chase Freedom which I don’t see how there is any way you’ll be approved – with no credit history – unless you have $10,000 with them. I’ve been 18 for only 8 months now and I just got approved for the Barclays US Airways and Arrival Plus cards along with the Chase Freedom card. I did this by always managing my credit wisely – including paying off my Cards early to keep their utilization to a minimum. 8 months ago I was approved for the Walmart and Target store cards and the Wells Fargo College Cash back card to get started with credit (I was already an authorized user on a good account of my parents which I think helps slightly to get you approved for your first card). About 2 months later I was approved for the Discover It Student card and the Amazon store card. About 2 months after that I was approved for the Barclays Arrival MasterCard. Finally this past week I was approved for my 3 newest cards. So to sum it up I think that the best way to get started with credit is with a store card (or a student card if you’re a student). And lastly, if you will manage your credit wisely there is no reason why you can’t upgrade your credit portfolio every couple of months.

O
O

I applied for a couple of cards for my Mom who has had a bankruptcy on her history. Applied for Sony Capital One card, approved with $5000, also got approved for Sallie Mae MC with $1400.
She got denied by Discover (Discover quoted a credit score of 612 even though Credit Karma shows 670 for her). She has had bankruptcy 5 years ago and she currently had a store charge card and an older (now closed) $300 HSBC card (Orchard Bank or something like that).

BTW I had added her as an authorized user on at least 3 credit cards that had perfect history and were at 7-10 years old so that surely helped build her credit.

Why one company would deny credit while another would approve is hard to say. I would say that you should try with more than one bank if you get denied by one.

ColinC

Another unsecured one that might be worth trying is Bank of America Cash/Travel Rewards by asking for a special application like “Large Corporate Client” or “Foreign Citizen”. They may even exempt you from needing an SSN. Additionally you can browse local credit unions and see if they have any relationship with organizations you’re part of and if they offer special deals for being part of them.

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