Credit cards for no credit: The facts

Credit cards for no credit history are specifically designed to help people who have to borrow money. Issuers realise that you have to start somewhere, so it's relatively easy to apply for credit cards to rebuild credit. Secured, unsecured and prepaid cards are available, often without the need to pass a credit check.

Types of no credit history credit cards

If you apply for a mainstream card, your application for credit is very likely to be declined. This is because issuers are able to cherry-pick the best customers and offer them the most favorable terms. Don't despair because a growing list of specialist issuers are prepared to help you to rebuild your credit history so that you can qualify in the future. Secured credit cards
This adverse credit card involves depositing a minimum of $200 in the issuer's holding account as collateral. In return for the provision of security, you'll be offered a matching credit limit. This is ideal if you're looking to make a large purchase or rebuild your credit history so you can qualify for a mainstream card. Prepaid credit cards
Submit a MasterCard or Visa card application for a prepaid card if you're worried about getting into debt. You aren't allocated a credit limit. Instead, you load your own money onto the card by bank transfer and you can spend it as soon as it reflects on your live balance. You'll pay a fee for loading the funds onto the card, but charges vary between issuers. Unsecured credit cards
Not the most favorable credit card rate and the fees are also high, but they're the most common type of card. You don't provide collateral, and you're allocated a credit limit of $250. If you manage your account properly, this will be reassessed after a period of six months. The low initial limit makes it quite difficult to rebuild your credit score.

What's the best credit card for no credit history?

The type of card that you select doesn't just depend upon whether it's a no fee credit card or the rate of interest. It's necessary to choose the card that's most appropriate for your personal circumstances. For example, if you've experienced difficulty in controlling your spending, a prepaid card will help to keep you out of debt. Secured versus unsecured card
If your objective is to repair damaged credit, you need to choose between a secured and unsecured card. The low initial limit on an unsecured credit card means that a secured card is the preferred option. This is because you need to keep your spending to below 30% of the spending limit, and that's very difficult when your credit limit is just $250.