To build credit, you must first obtain credit, which can be accomplished by opening a credit card account. You may believe that qualifying for a credit card when you have no credit history is difficult, if not impossible. However, if you know where to begin, this does not have to be the case.
A credit card application is probably not the best place to start your credit-building journey. In general, approval for these types of accounts requires good to excellent credit. However, you can always return to the premium credit card idea once you’ve established a positive credit history and a good credit score. Even if you are new to the world of finance, you do have options. There are several ways to obtain a credit card account that will help you build your credit.
Different Methods To Build Your Credit Card
It can be difficult to open your first credit account. Some lenders may be concerned about the risk of doing business with someone who has never managed credit.
Secured Credit Cards
A secured credit card provides a solution to this problem by lowering the credit card issuer’s risk. When you are approved for a secured credit card by a credit card company, you must make a deposit to open the account, which is typically equal to the credit limit on the new version.
Credit Cards With No Security
If you don’t want to deposit a deposit to open an account, you could apply for a traditional unsecured credit card instead. And, while certain unsecured credit cards may not be a good fit for you right now if you have little or no credit history, some options may work as a first credit card to help you build credit.
It’s important to note that unsecured credit cards for people with no or little credit may have higher interest rates and fees. So, if you go this route, make sure to shop around for the best deal. Student credit cards may also be worth considering.
A higher APR credit card, on the other hand, does not have to be a deal breaker. You can avoid paying interest by taking advantage of your credit card’s grace period. You might even be able to find unsecured credit cards for no credit that offer limited spending rewards.
Status of Authorised Users
The authorized user method is a third way to build a credit history with a credit card. This method does not require you to open a new credit card. Instead, you ask a loved one to add you as an authorized user to their existing credit card account.
Many credit card companies send credit bureaus monthly account updates for both primary cardholders and authorized users. If the account your loved one adds you to appears on any of your Equifax, TransUnion, or Experian credit reports, it could help you establish your credit history.
Your friend or family member must add you to a credit card account with a good payment history (and preferably a low balance-to-limit ratio). If a credit card with delinquencies or a high credit utilization rate appears on your credit report, even as an authorized user, it may create a problem rather than a solution for your credit score. Your friend or family member must add you to a credit card account with a good payment history (and preferably a low balance-to-limit ratio). If a credit card with delinquencies or a high credit utilization rate appears on your credit report, even as an authorized user, it may create a problem rather than a solution for your credit score.
You can check your credit card status and see how far your application has progressed if you have applied for a credit card and are awaiting a response. Many banks allow customers to check the status of their credit card applications via their websites. You can also use offline methods such as calling customer service or going to the branch.
Credit cards provide numerous advantages that can improve or enhance your financial situation. One of the primary reasons you should apply for a credit card is the opportunity to build good credit.
It is important to remember, however, that how you use credit cards determines whether they are beneficial or detrimental to you in the long run. A credit card could be a good credit-building strategy if you can avoid overspending and pay off your balances in full each month. However, if you believe you will struggle to use credit cards responsibly, you may want to consider a different credit-building strategy for the time being.