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Most consumers have at least one credit card in their wallet. Some may have a single card that they use only for emergency situations, and others may have several credit cards that are maxed to their credit limit. On the other hand, you may not have a credit card at all, and you may be struggling to find an account option suitable for those who do not have a credit history. When a credit card company extends credit to you, they assume risk. After all, some people make charges to their cards and never repay the balance. This harms the credit card company’s bottom line. Credit card companies review your financial status and credit scores to determine their risk when you apply for a new account. When you do have a credit rating, you may find it challenging to get a credit card company to take a chance on you because the credit card company sees this as a risk to them. However, there are some credit cards that are well-suited for individuals in your shoes.

Consider Secured Credit Cards as an Alternative

One of the best credit card options available for those who need to build or re-build credit is a secured credit card. When you apply for a secured credit card, you will place a cash deposit with the credit card company. This initial deposit remains in escrow, and it essentially becomes your credit limit. Because you have secured your credit card with collateral, there is less risk to the credit card company. You can borrow against these funds, and you can either pay the balance off in full or pay the balance off in monthly payments. Interest is charged on secured card cards, and you also may face late fees. Remember that the credit card company has the ability to take the security deposit if you do not make your payments on time as agreed.

What to Expect From an Unsecured Credit Card with No Credit History

One of the major obstacles many people face when considering a secured credit card relates to the cash deposit. Those who have no credit history or a bad credit rating often have limited funds in a savings account. They may prefer to keep their hands on the limited amount of money they do have rather than let a credit card company control it. With this in mind, an unsecured credit card that does not have a deposit requirement is preferred. You can find these cards available for those who do not have a credit history or who have bad credit scores. However, you generally will find a very low credit line and a high interest rate tied to these accounts. These are generally not affordable accounts, and they are usually designed only to help you build or re-build your credit rating.

The Effects of Handling Your Debt Responsibly

While your options for finding a credit card with no credit history or a poor credit rating are not ideal, there are still feasible options to consider. When you get approved for one of these accounts, it is important that you take steps to handle your debt responsibly. As a good rule of thumb, only make a couple of small purchases with your credit card each month. Some people will hop online immediately to pay the balance off in full. Others will wait for their monthly statements to arrive before making payments. When you follow one of these strategies, you can essentially avoid paying costly late fees. You can also build a respectable credit rating over time. Your improved credit rating may help you to qualify for a better credit card program within a few months or years.

The Effects of Making Late Payments

Some consumers will manage their debt responsibly, but others will unfortunately fall into the habit of making late payments. When payments are late, your account may be subject to an interest rate hike. This can make it more difficult to pay your balances off each month. In addition, you may be responsible for a late fee plus your monthly payment, and this can be a financial drain. When you are excessively late, your entire security deposit may be forfeited, and your account may be closed. Even a single late payment can damage your credit rating. As you can see, there are very serious consequences that you may face when you pay your bills late.

Knowing When to Upgrade Your Account

With proper debt management, you may benefit from an improved credit score in the months to come. This means that you may qualify for a better credit card. Some starter credit cards are convertible to better accounts, but in some cases, you may need to close your current account and open a new one. Talk to your credit card company about the options available based on your current financial situation. By doing so, you may qualify for a higher credit limit, a lower interest rate and even a rewards program in some cases.

Having a solid credit rating is important in many areas of life, but the reality is that many people have no credit history or a poor credit history. Regardless of your current circumstances, you can turn the situation around when you find the right credit card to apply for. Consider both secured and unsecured credit cards as possibilities as you search the Internet for the right program for your needs.