How to get a credit card with no credit score
Confused about getting your first credit card? Don’t know what a credit score is? Well, you are not alone. It can be pretty daunting to choose your first credit card, especially with no previous credit score.
A credit score is determined with the credit history and the type of credit that you have. While having a zero credit score might seem favourable because it means you have no dues, it can also have some implications in the future. For larger loans, banks look at credit history as a rule. Therefore, it is a good idea to get a credit card to build your score. Make sure you remember the following points when choosing your first credit card.
Have a steady source of income
Repayment of dues is majorly dependent on your income. Banks issue credit cards to people who have the ability to pay it off. Therefore, make sure that you have a regular income and will be able to pay off the dues.
Higher income shall lead to a better chance of getting approved for a credit card, if this is your first time. This is because a higher income raises the credit limit that is available. Do keep in mind that you shall not be applicable for credit cards with high rewards when starting off. Start off with a basic card and work your way up to a premium card with higher rewards.
Get a no-frills card
Going for a credit card is not all that bad. It inculcates the habit of handling your finances better along with benefitting from rewards and benefits. A good step to do this would be take a basic credit card, especially when you have zero credit score. You might consider a student credit card to build sound financial habits. You can also apply for a secured credit card. Such cards use your deposited amount as the credit limit, and is useful for those who have new jobs.
Read the fine print carefully
Brace yourself for much scrutiny when you have no credit score and have applied for a card. Banks will check your paying capacity, and a number of other factors before approving you a card. It is also important that you read the associated terms and conditions when you apply for a card. Watch out for banks which provide credit cards with no prior approval. Such cards are associated with a high interest rate or charges. In terms of prepaid cards, you can also expect no impact on your credit score.
In Malaysia, they exist in the form of junior cards and is meant for children. It is not like a supplementary card, since the balance on the card is paid beforehand from the primary card.
Use your connections effectively
It is useful to get support from your friends and relatives when building our credit score. Having someone to co-sign a credit card can help you get the benefits of someone else’s credit score. The good credit history of your friend or relative shall also be transferred to you, helping you start building your score on a positive note.
Defaulting on payments might impact the credit score of your friend or relative. In a similar manner, do not choose to co-sign with someone who has a bad credit history or is not regular on their payments. The responsibility of making payments on a co-signed card is equally shared, and therefore, affects the credit history of both the users.
Persistence is not the key
Do not act in despair if your credit card application is rejected by the bank. More importantly, do not keep applying after multiple rejections. Each application affects your credit score negatively, and you might start on the wrong foot when it comes to building your score. It is important to understand your financial situation and apply accordingly. Compare the different cards that are available in the market and choose the best one with the number of benefits. Keep in mind that you will not be directly eligible for a premium credit with too many rewards. Therefore, research is important in this respect.
Congratulations if you have already acquired your first credit card. Make sure you use your card judiciously so that you can build a good credit score in no time.