If you’re just starting your financial journey, you might have trouble getting credit. Many companies will only extend credit to people with an established spending and payment history…but you do have options.
Credit For No Credit – How You Can Get a Line of Credit When You Have None
It’s possible to build credit with a secured credit card or one designed specifically for first-time borrowers. You can even get a Credit Builder Loan to establish a credit history quickly. Learn about the various opportunities so you can begin building credit.
Apply For a Secured Credit Card
Here’s an option to get a credit card for no credit. You can apply for and receive a secured credit card if you haven’t yet established a financial history. This is a type of card secured by collateral in the form of cash. You simply make a deposit, and then the company issues the credit card. Your credit limit will equal the amount of your deposit. For example, if you secure the card with a $200 deposit, that’ll be your credit limit.
After receiving the card, you can use it in the same you would as a standard credit card. You can make purchases and at the end of the billing cycle, receive a monthly statement. It’s important to make at least the minimum payment when due each month to avoid penalties in the form of late fees and interest.
The card issuing company will report your payments to the credit agencies. So, if you make your monthly payments on time, you’ll see your credit improve — because payment history accounts for the biggest portion of your credit score calculation. If down the road you decide to pay off the balance and close the account, you’ll receive your deposit back. However, if you fail to make payments as agreed to, the credit card issuer will keep your deposit to pay off the balance.
Some companies allow you to start with a secured card and then transition to an unsecured card after proving you’re responsible. Not only will you get your deposit back but also enjoy the freedom provided by an unsecured credit card.
First-Time Credit Cards
Some credit card companies have special offers for students, as well as individuals without an established credit history. Often referred to as “first-time credit cards,” this option for getting a credit card for no credit typically has low spending limits and very few perks. However, after you make on-time payments for six to twelve months, some card companies will increase your credit line. The best way to improve your chance of getting a limit increase is by maintaining a low debt-to-credit ratio (also known as a low credit utilization rate).
Many first-time credit cards have annual fees. With some, you’re even charged a monthly fee. This is why it’s essential to read the fine print before applying for a first-time credit card. That way, you can avoid options with substantial fees.
Get a Credit Builder Loan
You don’t always have to get a physical credit card for no credit to gain access to cash. Instead, you can build your credit and get money immediately with a Credit Builder Plus Loan from MoneyLion. Start by applying for a Credit Builder Plus membership. At just $19.99 a month, this will give you access to a competitive APR loan of up to $1,000.
Along with giving you access to some much-needed cash, this type of loan comes with some additional perks. For example, MoneyLion sets a portion of your loan funds aside in an interest-earning Credit Reserve Account for you and gives it to you after you’ve paid off your loan. That means you’ll save money as part of the borrowing and credit-building process. MoneyLion reports your payments to all three credit bureaus. It also includes credit monitoring so you can watch your score increase.
With a 12-month repayment schedule timed to coincide with your pay dates, it’s easy to stay on top of your loan payments. Ultimately, this makes these advances affordable and one of the fastest and easiest ways to raise your credit score.
When you are a member of Credit Builder Plus, you also can get Instacash advances of up to $250 before payday. Since Instacash advances are interest-free, they’re an excellent way to get extra money before your scheduled payday.
The Importance of Building Credit
Building credit is critical for creating a solid financial future. A good credit score impacts interest rates on loans. In other words, you’ll pay much less when securing lines of credit, taking out a mortgage, buying a car, and making other major purchases if you have good credit. Your credit score can even impact your ability to rent a place to live, get a job, and much more.
Your credit score also affects standard living expenses. That includes cable companies, cell phone providers, and electricity companies since they often check credit before offering their services. If your credit is low or nonexistent, you might have to pay a deposit. In fact, these same companies could deny you service altogether.
Fortunately, you can begin building your credit profile by borrowing and repaying credit cards and loans. However, only borrow what you need and make sure you stay current on your payments. That way, you’ll grow your credit profile instead of hurting your score.
Begin Establishing Credit Today
Since establishing credit is so important, you should start building your profile today. You can take out a secured card or a credit card for first-time borrowers.
Other options are to open a MoneyLion account and apply for a Credit Builder Plus membership and take out a Credit Builder Loan. With easy access to money and lots of features, this loan will help you build credit quickly.