Building your Credit: How to get a Credit Card with No Credit (or Bad Credit)

Building your Credit: How to get a Credit Card with No Credit (or Bad Credit)

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We have many clients who need to work on their credit in order to qualify for a home loan. For many, the answer is as simple as obtaining a credit card!

Some people don’t have a credit score because they don’t have enough accounts reporting to the credit bureaus. Other people may have low scores because they have missed payments or had delinquent accounts in the past. For low credit scores, often there is nothing positive reporting to the credit bureaus that would increase the scores and reduce the impact of those past issues.

For both of these situations, we typically recommend obtaining a credit card. If used correctly, a credit card will provide a constant stream of positive information to the credit bureaus. This will help your score increase.  In fact, it’s very difficult to have a decent credit score WITHOUT having a credit card.

We find that some people are intimidated by credit cards. They are worried that a credit card will hurt their credit score. This is not true. As long as you use your credit cards the RIGHT way, it can have a positive impact on your credit score.

Unfortunately, it may be difficult to obtain a credit card if you’ve had credit issues in the past or you have zero credit history. This can seem like a classic catch-22! You need a credit card to build your score, but you can’t get a credit card because your score isn’t high enough.

Enter the “Secured Credit Card”

In these situations, we recommend a “Secured Credit Card.” A secured credit card requires a cash security deposit that becomes the credit line for the account. For example, if you put $300 as the deposit, your credit line on the account will be $300.

As long as you get a card that reports to all 3 credit bureaus, it will report just like a regular credit card. As long as you use the card correctly, it will help to build and improve your credit score!

It’s important to note that your deposit will be held until you close the card or convert it to a standard credit card. The deposit is not used to pay off any charges that you make. Instead, it is simply there as a security deposit in the chance that you become delinquent and cease making payments to the account. This allows the credit card companies to offer cards to consumers with lower scores, since they have the security deposit available to cover their losses if the individual does not pay their bill.

A great resource for obtaining a secured credit card is http://www.creditcards.com/secured-credit-cards.php. You can also do a Google search for “secured credit cards”. Just make sure that you get a card that reports to all 3 credit bureaus.

After you get your secured credit card, make sure to read this article to find out how you need to use your new card in order to improve your credit score.


Do you have questions about your credit or the pre-approval process for buying a home? Contact us today!  We’ll look at your credit and financial situation and prepare a personalized plan for what you need to do to become a homeowner.

Originally published Aug. 23, 2017, updated April 25, 2019