For most people with no credit history and only an average level of income, you will be looking at getting either a secured credit card – where you have to leave an amount of money equal to your credit limit in the bank as a guarantee – or a card with a very low credit limit and no perks. I would advise on the latter option, as the first option isn’t really a credit card at all, you would basically just be spending your own money and paying it back to yourself each month.
Luckily, cards such as the Capital One Platinum are easy to get, and are designed specially for people building credit or repairing bad credit. Capital One normally issues a 300 dollar credit limit for people with poor credit ratings or no credit history. This is then increased to $500 after five months, as long as all the payments are met on time. After that, further on-time payments lead to further increases. Don’t worry if your income is low, I have heard of cases where students or people with incomes only a little over 10k per year have been approved for this card.
Another option, that could get you a card with more perks and rewards, is to apply for a card from your bank, since if your employer is making direct deposits into your account every month this gives an impression of stability. You may get refused first of all, but if you go into your local branch and talk with a banker and get them to trust you, they may help you by writing a letter of recommendation to the bank’s credit card department (this is normally different from the department that handles your checking account).
I had this experience when I applied for the my first credit card a few years ago. At the time I was having around $1600 deposited in my checking account every month, I was denied the first time I applied, but then I went into the bank and talked to a banker who had helped me set up accounts there in the past, I explained I didn’t have much of a credit history, but wanted the card for building credit. He wrote a recommendation letter for me and I was approved for the minimum credit limit on that card of $500. After that, pay your bills on time and your limit will increase.
So what factors can affect your credit score? Check out the next article…