Top Credit Cards for Limited Credit in 2020

Top Credit Cards for Limited Credit in 2020

September 17, 2020         Written By Tracy Farnsworth

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Building your credit history takes time and care. Credit cards are one of the steps to this, but credit card issuers may turn you down without having any credit history. It’s frustrating because having limited or no credit history makes it harder to qualify for a credit card, but you can’t build a credit history without some type of credit product like a credit card, car loan, or student loan.

When you’re just out of high school or college, it’s unlikely you have much of a history at all. If you have anything in your credit file, it may not help as much as you’d expect. For college students, the debt piled up with college loans can be substantial and make you look like a credit risk. As payment history is the most important criteria when it comes to building a credit score, it’s unlikely you’ll have much of a score until you’re regularly making payments on your college loans and getting that debt paid off.

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Even after you have a steady job, you need to have several months of making student loan payments on time. If you’re fresh out of high school, you don’t have college loans to help you build a credit history. You’re starting from scratch. You have to have a credit card. Not every credit card issuer will approve your application without having months of employment under your belt. Unless your parents are willing to co-sign, you need to apply for credit cards for limited credit.

Many credit card companies shy away from applicants with limited credit. Take your time and research offers carefully to avoid damaging your credit report. While it may seem unfair, another factor that goes into your credit score is how many credit cards you apply for. If you apply for several, it will drag down your score.

If you can pre-apply and see if you’re likely to get approved, it makes a difference. Pre-applying doesn’t impact your score. If that’s not an option, carefully apply for credit cards that are willing to offer new credit cards to people with limited or no credit history. Here are six of the best credit cards for people with limited or no credit history.

 

Surge Mastercard® Credit Card

The Surge Mastercard® Credit Card offers consumers the ability to see if they are pre-qualified without impact to their credit score.  Since hard inquiries can hurt your score, this is a reason for you to consider this card.  All credit types are welcome to apply and you can be considered for credit lines between $300 and $750 by submitting a few pieces of information into the Surge Mastercard® Credit Card application.  If you are approved and become a cardholder, there is monthly reporting to the major credit bureaus, and the potential for credit line increases after just six months.

You can also access your TransUnion Vantage 3.0 score when you get the Surge Mastercard® Credit Card. Sign up for e-statements and you’ll see how your credit score is doing from month to month. Sign up for e-statements and you’ll see how your credit score is doing from month to month. This makes it easy to keep track of your score and, with responsible use, build or improve your credit score

 

Why apply for the Surge Mastercard® Credit Card?

  • See if you’re Pre-Qualified with no impact to your credit score
  • All credit types welcome to apply
  • Free access to your Vantage 3.0 score from TransUnion* (When you sign up for e-statements)
  • Monthly reporting to the three major credit bureaus
  • Fast and easy application process; results in seconds
  • Use your card at locations everywhere Mastercard® is accepted
  • Checking Account Required

 

Reflex Mastercard® Credit Card

All credit levels are welcome to pre-qualify and apply for the Reflex Mastercard® Credit Card. Whether you have no credit or limited credit, the credit card issuer will give you a fair chance. With pre-qualification, you’ll have an idea if your application will be accepted and what credit line you’re likely to be offered when you apply for real.

Your purchase and payment history is reported to Equifax, Experian, and TransUnion, which helps build your credit score. Make small purchases, pay them off each month or over a few months for larger purchases, and wait for the credit bureaus to add the information. As the month’s pass, you’ll see your credit score improve as long as you’re not making late payments.

Once you are a cardholder, you can use the Mastercard anywhere Mastercard is accepted. Call the toll-free number as soon as you receive the card. The credit card issuer requires you to call to activate your new credit card within 30 days of the card’s receipt. You do need a checking account in order to qualify. This makes it easy to pay your bill each month as the account is already set up for online banking.

 

Why apply for the Reflex Mastercard® Credit Card?

  • $0 fraud liability
  • Find out if you qualify within seconds
  • Free Vantage 3.0 credit score on your monthly e-statement
  • Pre-qualify before you apply and impact your credit score

 

First Access Visa® Credit Card

You might not want your first credit card to be a secured card. If you don’t want to have to make a refundable deposit, the First Access Visa® Credit Card is a good choice. You won’t get a large credit line, but it’s enough to help you build a credit history.

After a year of on-time payments, the annual fee you’re charged decreases. It does have a higher-than-average APR, but the card is useful in making small purchases, paying off the amount you charge each month or over a few months, and improving your credit score. Use this card to build a credit history so that you can apply for a low-interest credit card.

While some banks only approve people with fair or better credit ratings, First Access Visa approves many people who’ve been denied by other banks. Apply online, choose your card design, and wait for your fast decision. If you need the credit card in days rather than weeks, pay for expedited processing.

 

Why apply for the First Access Visa® Credit Card?

  • $0 fraud liability
  • 24/7 customer service
  • Approval takes less than a minute
  • Expedited card delivery, if needed
  • Poor credit qualifies
  • Reports go to all three credit bureaus

 

Citi® Secured Mastercard®

Build your credit with the Citi® Secured Mastercard®. There’s no annual fee for this card, and the credit line tends to be higher than other secured credit cards. Deposit $200 to $2,500 and have a credit limit that matches your deposit.

One of the benefits of the Citi Secured Mastercard is the lower APR. While it’s common to see secured credit cards with APRs of 30% or higher, the variable rate on the Citi card is far more reasonable. Once you apply and undergo a debt and income review, you’ll make a deposit that secures the offered credit limit. Make charges against your credit limit and pay the minimum or more each month. You’ll build your credit score quickly with this card.

 

Why apply for the Citi® Secured Mastercard®?

  • $0 liability protection
  • APR is lower than many competitor’s rates
  • Free access to your FICO credit score
  • Larger secured credit line than other cards

 

Capital One® Secured Mastercard®

The Capital One Secured Mastercard will not give you a large credit line, but it gets you started. Deposit up to $200 and get a credit limit that matches your deposit. Use the card to purchase items or subscription services, make monthly payments, and watch your credit score improve. Unlike many credit cards for poor or no credit, this one doesn’t charge an annual fee.

 

Why apply for the Capital One® Secured Mastercard®?

  • No annual fee
  • Pre-qualify before you apply
  • Refundable deposit determines your credit line, which makes it harder to get in too deep

 

Assent Platinum 0% Intro Rate Mastercard Secured Credit Card

Assent Platinum 0% Intro Rate Mastercard Secured Credit Card is the perfect card for borrowers with less-than-perfect credit. You do have to make a deposit that secures your credit line, but it’s one of the only limited-credit cards that has a 0% introductory APR for cardholders with bad or no credit. Apply for the credit card online and get a 0% APR for six full months if you’re approved. Credit lines range from $200 to $2,000, depending on your income, and are backed by a refundable deposit. Your monthly activity is reported to all three credit bureaus.

The Assent Platinum card does require an annual fee. It’s not as high as some secured credit cards. Note that the card isn’t available to residents of Arkansas, Iowa, New York, or Wisconsin.

 

Why apply for the Assent Platinum 0% Intro Rate Mastercard Secured Credit Card?

  • 0% APR for six months and the APR after that isn’t unreasonable
  • 24/7 account access
  • Accepted anywhere Mastercard is accepted
  • Backed by a refundable deposit to prevent you from getting in over your head
  • Larger than normal credit lines of up to $2,000

 

Tips for Improving Your Credit Score

Your FICO credit score is based on a simple formula:

  • 35% – Payment History
  • 30% – Amount of Debt
  • 15% – Length of Credit History
  • 10% – Credit Mix
  • 10% – New Credit

On-time payments are the most important criteria for establishing good credit. This is recorded over the years, so every late or missed payment can negatively impact your credit score. A few late payments would destroy your credit score, but it’s better to make sure that every payment is made on time. Use bill payment reminders and automated payments to make sure nothing is missed. On the day a payment is due, check online to make sure the payment has been made and keep track of the transaction ID in case something goes wrong.

How much you owe is also important. Credit bureaus look at how much money you owe compared to your credit lines. Credit utilization is a ratio of your credit lines to the amount you’ve charged. The more you owe, the lower your credit score. Ideally, it’s recommended that you keep your credit utilization to 30% or less. If you have $6,000 in credit lines, you shouldn’t charge more than $2,000 from month to month. If you’re over that, you need to take steps to pay it down as quickly as possible.

You also want to have a long history with a credit card company. The longer your history, the better it looks. Don’t bounce from one credit card company to the next in a matter of months. When possible, apply for a credit card with your preferred bank and stay with them. If you like Capital One’s customer service team, stick with that bank. When it’s time to apply for a new credit card to get an unsecured credit card or one with a low APR, try to stay with the same bank so that you’re extending your credit history with that bank.

As you build your credit history, take out different types of credit. Start with a credit card and increase to a small car loan and/or rent. A variety of credit types helps. Credit bureaus look to see what you have for a credit mix. It might be you have credit cards, store cards, rent/mortgage, car loans, student loans, and/or personal loans. You don’t need to have a loan in each of these categories, but it’s advantageous to have lines of credit or loans in different areas.

Finally, avoid applying for too many credit cards in a short amount of time. Applying for one or two cards is okay, but hard inquiries remain on your credit report for up to two years. According to Experian, a hard pull of your credit can drop your score by up to 10 points. Applying for just four credit cards could drop your score substantially. This is why it’s always best to pre-qualify when possible. You won’t waste hard pulls of your credit on credit card issuers that would never approve your application.

After you receive a new credit card, use it wisely. Make purchases and pay your bill on time. If you decide to use your new credit card to purchase a computer, divide the cost of that computer over a few months and pay it off in time. If you show you will pay off the things you buy with your credit card, your score will increase.

Once you’re in the good to excellent credit range, you’ll find new credit card offers are favorable with much lower interest rates and better rewards and benefits. Before you reach this point, you need to apply for a credit card for people with limited credit and start taking baby steps to build a strong credit history.

 

If you need help finding the right credit card, use the Low Cards Credit Card Selection Tool to get started. The process only takes a few seconds, and we’ll match you with the best credit card offers to meet your needs.

 

Sources:

https://www.myfico.com/credit-education/credit-scores/new-credit

https://www.experian.com/blogs/ask-experian/how-many-points-does-an-inquiry-drop-your-credit-score/#

 

 

The information contained within this article was accurate as of September 17, 2020. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

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tracy

About Tracy Farnsworth

Tracy Farnsworth went straight from a business track in high school to a full-time job in mortgage banking in Burlington, Vermont. After having children, she built a freelance career in content writing and took online classes as time allowed. She completed Social Media Marketing and Digital Marketing certificate programs with Ireland's online Shaw Academy and completed several courses in SEO and analytics. In her free time, she's the “mom” to a very clingy rat terrier, and the pair walk at least a mile every day. She's also a novice baker who is trying to master the art of sourdough bread.