Qualifying for a credit card is easy if you have a good credit history. But what if you don’t have any credit history?

The applications of nearly one out of every four Americans are denied by card companies, and the biggest reason is lack of borrowing experience.

The major credit bureaus need to see how you have managed debt in the past in order to assess your ability to manage and repay debt in the future. They have little reason to decide in your favor if they have no evidence that you can responsibly use a credit card. But all is not lost if you have no credit history. Some companies offer cards designed for people just like you.

Can You Get a Credit Card If You Have No Credit History?

Having a good credit score helps, but it is not the only way to qualify for a card. In fact, having a bad credit history is worse than having no credit history at all.

The catch is that issuers of a starter credit card will probably offer you a higher than average interest rate at first. Other terms of borrowing may also be less favorable than standard terms. But getting even a little credit on suboptimal terms enables you to build a favorable credit history after a short period of making payments on time. You can get a credit score from FICO within six months and you can get one from VantageScore within one month.

In contrast, persons with a poor credit history must wait anywhere from 12 months to 18 months to convince a card issuer that they are now low-risk borrowers.

What Does It Mean to Have No Credit History?

If you have no credit history, you have never applied for a credit card, loan, or any other form of financing. So major credit reporting agencies have no information about you.

The Consumer Financial Protection Bureau categorizes such individuals as “credit invisible.” In the United States, over 26 million people are in this category.

You may think that having no debt is a good thing, and this may often be true. But it’s not true when you are applying for credit.

Preparing for Your First Credit Card

Getting a credit card is a big step towards building credit, so take the time to find the best one for you. To protect your creditworthiness, avoid sending out too many applications at once; each application triggers a hard inquiry of your credit history, which hurts your credit score. Remember: having a bad credit history is worse than having no credit history.

Some lenders are willing to take a chance on persons without a credit history, but the amount of risk that they will accept is limited. Fortunately, you can take steps to improve your odds before you apply.

Check the income requirements.

One of the first things a credit card provider looks at is your income. A stable monthly income means that you are more likely to pay your credit card bills on time.

Different credit cards and credit-card plans have different income requirements. You can find out about these requirements by visiting the website of your credit card provider or by calling the company before you apply. Of course, meeting income requirements is a necessary but not sufficient condition for getting a credit card; it does not guarantee that your application will accepted. But it does significantly improve your odds.

There are also credit card offers for persons with low income.

Check the annual percentage rate.

The annual percentage rate or APR of a credit card determines the cost of the credit. If you carry a balance beyond the grace period for paying it in full, the interest that the issuer charges largely depends on the APR.

In the United States, four out of every ten cardholders prefer carrying a balance to paying their credit card bills in full. The financial industry calls them “revolvers”; those who settle their accounts diligently are “transactors.” Even if you expect to fully settle every bill, it’s a good idea to look for a low APR. The lower the APR, the less likely you will fall into a debt trap.

Check the fees.

Resist the temptation to grab the first opportunity that comes your way. Steer clear of issuers who charge a slew of fees, including application fees, annual fees, even monthly maintenance fees. Many unsecured cards waive the annual fee. If you look hard enough, you can find a secured card that will also waive this fee. An example is the Secured MasterCard from Capital One.

Check the credit limit.

The federal government requires card issuers to evaluate an applicant’s ability to pay and set an appropriate credit limit. This means that your first credit card will probably have a relatively low credit limit.

But not all cards are created equal, and some issuers are more generous about credit limits than others. Look at as many potential card issuers as possible and weigh your options carefully before applying to a particular issuer.

Get prequalified.

Credit-card providers often make prequalified offers for which you may be eligible if you have a regular income. You don’t have to wait for banks to make such offers, though. There are ways that you can actively pursue them.

Some companies have preapproval tools on their websites that you can use to see whether you are eligible for one or more of their credit-card offers. Using the tool takes only a few minutes, doesn’t require you to provide much information, and initiates only soft credit inquiries that won’t affect your credit score.

Getting prequalified does not automatically make you a cardholder. It means only that you meet the issuer’s initial criteria. You still need to submit an application. But being prequalified does mean that you have a pretty good chance of being approved.

Credit Cards That You Can Apply for If You Have No Credit History

Student credit cards

One reason that people lack a credit card or a credit history is that they are still studying. If that’s you, you can apply for a student credit card. Unlike secured cards, student credit cards do not require you to pay a deposit. But you need an independent source of income to qualify if you are younger than 21.

Although student credit cards typically offer fewer rewards than regular credit cards, some do offer cash-back bonuses and other incentives.

Store credit cards

If you plan to use your credit card mostly at a particular store, a store credit card may be better for you than a general-purpose card.

Most retailers are willing to approve applications even from people with little or no credit history. Moreover, many store cards have improved significantly over the years, offering better rewards and becoming more useful for general purposes.

When getting a store-brand card, try to choose one that can be used anywhere—so-called open-loop cards. Closed-loop cards can be used only in the issuing store or in other stores under the brand’s umbrella.

A store credit card can help you build a credit history even if you use it sparingly. Once you have accumulated enough of a credit history, you can apply for a better card.

Secured credit cards

Secured credit cards are backed by a cash deposit that you must give the issuer. The size of the deposit determines the limit on your credit card. The minimum deposit varies from vendor to vendor, and some require a fairly low deposit. So satisfying this requirement should not be a big problem.

Many secured credit cards also provide incentives like cash back on purchases or waiving of annual fees. Others give you a chance to eventually convert your card into an unsecured card.

Some secured cards are not widely accepted internationally, so talk to your issuer before traveling overseas.

Other Options for Establishing Credit

You can also build a credit history by becoming an authorized user of someone else’s credit card. In this arrangement, the primary cardholder is responsible for settling all purchases made using the account.

Most card issuers report the activities of authorized users to credit bureaus. This means that if the primary account holder is conscientious about paying the bills, the payments be reflected in your own credit history.

A friend or relative who will not let you use his credit card may agree to be a cosigner instead. If you fail to pay for any debt, late fees, or collection costs, the cosigner is responsible for them. Anything that happens to your account will also affect the credit history of the cosigner. So this is a big commitment, one you can ask only a family member or a close friend to make.

Conclusion

Trying to get a credit card when you do not yet have a credit history can be frustrating. But all credit histories have a beginning. And you need a credit history if you hope to obtain major loans for a car, home, or business. Fortunately, you have many ways to get the ball rolling, from getting a secured credit card to becoming an authorized user of someone else’s card. Whatever method you use, being responsible with your starter card will help you build a solid credit history.