What Are The Best Credit Cards For Students With No Credit? How Can Students Start Building Credit?
It's tough being a student nowadays. Especially if you have little to no income, numerous spending, and no credit history. If you want to gain access to essential financial products like credit cards, then follow this article to learn about the best credit cards for students with no credit
As exhilarating as student life might be, it can be stressful, not just because of exams. Part of what makes student life so tricky is that the average student is usually broke. Indeed, a student’s earning potential is limited without any genuine skills — after all, that’s what you’re in school to study.
Building credit is difficult when you’re initially starting, especially for students who need more credit history on their accounts. In the same way, finding a high acceptance rate with a credit card is even more challenging when you have no credit.
Some credit cards, however, are designed for those who have little to no credit history and those students who want to start building credit. These people include students and others with thin credit histories. Student credit cards are unsecured, even though many cards in this market are secured and demand a security deposit.
There’s no need to give up if you wish to get authorized for a student card, but you still need to start building credit. If you are looking for the best credit cards for students with no credit, compare the cards listed in this article to find the best option; they were chosen with people like you in mind. Also, follow this article to the end to know all about how students can start building credit and all that you need to know about credit cards for students.
What is a student credit card?
Credit cards for students operate similarly to regular credit cards. Since they are unsecured, neither collateral nor a security deposit is required. Student credit cards are intended exclusively for individuals attending college, and also candidates without a credit history can qualify for one.
The main distinction between student and ordinary credit cards is their qualifying conditions. You can obtain a student credit card from a bank or credit union whether you are a full- or part-time student.
Compared to other types of credit, such as personal or vehicle loans, you have a higher chance of being approved for a student credit card. When used responsibly, a student credit card can be a helpful tool as you finish school, enabling you to pay for necessary expenses and establish credit simultaneously.
Some credit card companies let you switch your account to a regular card once you graduate. You’ll be eligible for a larger credit limit if that occurs. After your student status expires, other cards will expire shortly after you graduate.
You’ll need to present evidence of your student status to get a student credit card, such as a current and unexpired student ID card, an invoice from the institution or university, or a transcript.
Reasons to get a student credit card when you have no credit
Student cards are among the most excellent ways to establish credit because of the straightforward approval criteria and cardholder benefits. In reality, there are plenty of compelling reasons to apply for a student credit card while you’re still in school.
You probably have yet to have an opportunity to establish credit while attending college. Your credit history and score significantly influence your life, affecting everything from getting approved for housing to making auto purchases.
Getting a student credit card is wise since it will allow you to establish a credit history early, which will be beneficial in the long run. For starters, your credit score is influenced by the age of your credit history, precisely the age of your oldest credit account.
Many lenders consider your credit score a crucial factor when you apply for a credit card or loan, as you may have heard in one of those omnipresent credit score app advertisements. Early credit history establishment can assist raise your credit ratings.
By graduation, you might have good credit if you manage your student credit card wisely. Many credit possibilities that would otherwise be out of the question for someone just starting can be opened up by having good credit, especially given that many recent graduates make at most modest wages.
There is no need for a credit history to be approved
Many credit products require a good credit history; if this is your first credit transaction, you probably won’t be approved for those premium travel rewards cards. On the other hand, first-time cardholders are the main focus of student credit cards. Consequently, you won’t even need to have one day of credit history to get approved for a student card.
In other words, you can apply for a student credit card even if you have no credit history or score. But even if you don’t need a credit history, you will still need a source of income to apply for a student credit card (or any other credit card, for that matter).
If you are younger than 21 but older than 18, you must have a source of independent income through employment. Scholarship and grant funds may also be included in your total qualifying income if you are 21 or older.
Have an emergency credit card on hand
As you make your way home, your car breaks down. You need to return home immediately due to the illness of a family member. Emergency expenses could arise in any circumstance at any time. You can pay for those expenses right away if you have a credit card. Having a credit card gives you additional security because, depending on where you live, emergency services, like towing companies, might demand you to pay with plastic.
Get cardholder benefits
Why is it advisable to use a credit card in college? Promotional benefits for credit card users are frequently available. There may be other advantages, including the potential to receive an account credit for eligible purchases or cash back in a few selected categories.
For the first year, there is typically no interest charged, which is advantageous for students who are just starting to develop good spending habits. Several credit card providers offer exciting initiatives to college students, such as scholarships and credit card benefits.
You can earn rewards
You can benefit from rewards on your purchases when you use a student credit card. For instance, you can receive 5% cash back with the Discover Student Cash Back card on purchases made at grocery shops, restaurants, gas stations, and some PayPal transactions, up to a quarterly maximum. On all other purchases, you can also get 1% cashback.
Remember that rewards are only a way to entice you to spend more money. Be wise! Only use your card for necessary transactions to minimize interest charges and excessive debt. Overspending can only lead you to increase your interest rates and debt which can be a severe issue in the future.
How can students with no credit history obtain a credit card?
Fortunately, some student credit cards accept applications from people without a credit history. These cards are similar to conventional credit cards in many ways; however, they are usually made for students with little credit history. Being a student is one of many requirements for a student credit card. Other minimal standards must be met. You must also
- You must be at least 18 years old.
- You must have a united states address
- You need to have a social security number
- Display proof that you are enrolled in school
- You must be able to provide all of the information requested on the application
What should students with no credit look for in a credit card?
When looking for credit cards, college students and young people should carefully weigh their alternatives and consider all of the card’s features. You don’t want to get yourself into something that you didn’t like in the first place and regret it later on. You should pay attention to
- The fees and APR: Some credit cards for students have no annual fees. Check the card’s APR or the interest rate that will be charged to the account. The risk you represent to the credit card company affects how each card’s APR is calculated.
Student credit cards sometimes carry higher APRs than non-student cards because they are designed for borrowers without a long history of borrowing money and repaying it. But that only motivates you to make monthly payments on your balance.
- Rewards: Some student credit cards provide benefits like cash back on specific purchases; however, most student credit cards won’t exactly shower you with rewards (the most significant rewards cards are often reserved for the most eligible candidates with extensive, favorable credit histories).
- Credit cap: Your credit limit is the amount you are permitted to charge on the card. Depending on the card, the user’s income, housing cost, and creditworthiness will change.
- Rates for new customers: For a limited time, some cards give new card members an introductory benefit like 0% intro APR on purchases. You won’t be assessed interest on the remaining purchase balance throughout the promotional period. Once the introductory time is up, the regular purchase APR takes effect.
Best credit cards for students with no credit
Credit card firms appear to know that everyone has to start someplace and don’t want to miss out on a market of impressionable young minds; thus, there are student credit cards—cards intended expressly for students with little to no credit. Our list of the best credit cards for students with no credit investigates the market’s most fantastic possibilities.
Bank of America Unlimited Cash Rewards credit card for students: it offers 0% APR (annual percentage rate)
College students who want to establish credit quickly and earn rewards can consider the Bank of America Unlimited Cash Rewards Credit Card for Students. With no annual fee, this card enables users to receive a flat 1.5 percent cash back on all of their purchases. Those who spend $1,000 on new goods within 90 days of account opening are also eligible for a $200 cash prize.
Additionally, cardholders receive a free FICO score and 15 months of 0% APR on balance transfers and purchases made within 60 days of account activation (a 3% balance transfer fee is applicable, with a minimum $10 charge). A variable APR of 16.24 percent to 26.24 percent is then in effect.
- There are no annual fees.
- Purchases and debt transfers are eligible for introductory APR.
- Earning good rewards
- Bonus for new customers
- There are no significant advantages.
- Balance transfer fees are exorbitant.
- Excessive foreign transaction fee
Capital One SavorOne Student Cash Rewards Credit Card: offers fair credit
The Capital One SavorOne Student Cash Rewards Credit Card is offered to students with fair credit, defined as a FICO score ranging from 580 to 669. This card has no annual fee and allows you to earn 3% back on dining, entertainment, popular streaming services, and grocery store purchases and 1% back on other expenditures. There are no foreign transaction fees, and you can cash out your rewards in any quantity.
- There is no annual charge.
- There are no foreign transaction costs.
- Excellent cash-back incentives
- There is no reduced introductory APR
- Bonus cash-back reward types are limited
Discover it Secured Credit Card: if you have bad credit
You should start rebuilding your credit with a secured credit card if you’re a student who has made credit blunders in the past. You must put down a refundable cash deposit as collateral for this sort of card, but responsible credit use allows you to raise your credit score.
It costs at least $200 to open a Discover it Secured Credit Card, but it sends your payments to the three credit agencies to help you establish your credit profile. There is no annual charge, and you get 2% back at petrol stations and restaurants up to $1,000 per quarter (after which you get 1% back), plus 1% back on everything else. Discover will also match the rewards you’ve earned after a year with its Cashback Match program.
- 5% cash back on rotating bonus categories after registration
- First-year cash-back match
- The 5% bonus cashback rate is restricted to $1,500 in spending per quarter.
- Bonus categories must be activated quarterly.
- Low base reward rate of 1%
Chase Freedom Student credit card: if you want rewards and a low APR
The Chase Freedom Student credit card stands out since it allows first-time credit cardholders to receive 1% back on all transactions while offering a reasonable variable APR of 16.49 percent. Cardholders can also get a $50 cash incentive after making their first purchase within three months of account opening and an annual $20 Good Standing Reward if they keep their account in good standing for the entire year (for up to five years).
With at least five on-time payments on this card, you may be eligible for a credit limit increase, and you may monitor your credit score for free with the Chase Credit Journey program. There is no annual charge, and there are alternative possibilities that fight for the top-of-the-class ranking.
- Earn a $50 welcome incentive after your first purchase during the first three months.
- All purchases will earn you 1% cash back.
- Accounts in good standing will get a $20 account anniversary prize every year for the next five years.
- For qualifying cardholders, the credit limit increases after five on-time payments.
- Free credit report
- There is no annual charge.
- There are no other expense categories.
- There is no 0% APR offer for purchases or balance transfers.
Discover it Student chrome: if you want first-year rewards
Finally, there is no annual charge for Discover it Student chrome. This card is unsecured, allowing you to earn 2% back on up to $1,000 spent per quarter at petrol stations and restaurants (then 1% back) and 1% back on all other transactions. After the first year, Discover will double all awards you earn.
This card also has a 0% APR on purchases for six months, after which it has a variable APR ranging from 13.24 percent to 22.24 percent. As a result, it is an excellent alternative for students who need to acquire college textbooks or other school materials and then pay them off over time without incurring interest.
- There is no annual charge.
- Earn incentives while improving your credit.
- Any cash back earned is automatically matched at the end of your first year as a cardholder.
- APR Introductory Offer
- At the top level, reward earnings are limited to $1,000 in purchases per quarter.
- In comparison to other student cards, the rewards are subpar.
Is getting a student credit card a good decision?
Student credit cards are designed for people with poor or no credit histories and low salaries. Generally speaking, if you are enrolled in school, have a little income, and have a little credit history, consider applying for a student card. These conditions apply if you have never had a credit card or other loan.
With that said, students between the ages of 18 and 20 can only record their own personal income on credit card applications, which can include money from jobs or revenue from scholarships or financial aid. As a result, obtaining authorization for a student card can be challenging if you don’t make a lot of money. You may be permitted to include household income on your application if you are 21 or older.
If you have fair credit or better and a consistent source of income, you are more likely to get approved. You might not even need to select a student credit card at all. If you have a job and pay your own bills, you may qualify for several credit cards for fair or reasonable credit.
How will you decide what to do next? Checking your credit score to determine where you stand is your best bet. You can also take action to improve your credit history, such as applying for a credit builder loan.
How to start building credit as a student?
A strong credit score is necessary for many crucial things in life. It will be considered when you apply for a vehicle loan, a mortgage, or a credit card. However, a good credit score may be important in ways you have yet to consider.
Certain rental properties, for example, will use your credit score as a deciding factor in their choice to rent you an apartment, and some mobile providers will check your credit to determine whether you can get financing on the phone. The sooner you start developing credit, the more time you have to strive toward a high credit score. Here are some things you can do to get started.
Become a registered user
One excellent option to begin establishing your own credit is to have a parent or guardian add you as an authorized user on their credit card. You will benefit from having your own credit card and access to the primary cardholder’s credit limit as an authorized user. You won’t be legally obligated to settle the credit card debt. You don’t even need to use the card to profit from activity on the account, raising your credit score.
Make sure the credit issuer reports authorized users to credit bureaus if you are considering this option because this is not always the case. You won’t see any change in your credit record if authorized users aren’t reported.
Open a credit card for students
Card issuers understand the importance of providing students with access to credit. Credit cards can assist with daily spending in addition to helping to establish credit. Due to the needs of students, many card issuers provide unique student credit cards.
Student credit cards frequently provide educational benefits like cash back for high grades and don’t need applicants if you don’t have a strong credit history. Some student cards offer additional advantages, such as raising your reward percentage for on-time payments. One of the top student credit cards can raise your credit score when used appropriately.
Open a secured credit card
If you don’t have a credit history or if your credit score has suffered, a secured credit card is another choice for establishing credit. Because of how secured cards are set up, you are nearly certain to be approved for a secured credit card offer.
A secured credit card, like a debit card, is backed up by your money in the form of a deposit. This deposit will be applied to a portion or all of your credit limit. On the other hand, the difference between a secured credit card and a debit card is that secured credit card activity is reported to credit bureaus. Making small daily purchases with your secured card is a great way to build your credit score and gain access to unsecured credit cards in the future.
Find a co-signer
You can have someone cosign for you on a credit card, just like you can with a loan. Credit cards, on the other hand, will be more limited. You are the principal cardholder when you open an account with a cosigner. You are responsible for all charges on the credit card, and bills will be mailed to you in your name.
However, if you fail to make payments, your co-signer is responsible for paying off the account’s debt. As a result, finding a cosigner may be difficult because there are considerable dangers involved for anyone who agrees to do so.
Applying for too many credit cards at once is not a good idea
Applying for another credit card after you’ve been approved for your first may be tempting. However, applying for many credit cards in a short period of time is not recommended for a variety of reasons.
To begin, applying for many credit cards in a short period of time may raise a red signal with card issuers. In fact, several credit card companies have policies that discourage numerous applications. Not to mention that each time you add a credit card to your wallet, you open the door to further debt. That’s a lot of responsibility for a student to bear, especially if you don’t have a full-time job.
It is also detrimental to your credit score. A hard inquiry is made into your credit record every time you apply for a credit card. In the near term, hard questions lower your credit score, and many inquiries can make you appear to be a credit risk in the long term.
Maintain a consistent payment history
Keeping up with your credit card payments is the most significant component in improving your credit score. Payment history accounts for 35% of your credit score calculation and shows you how to use credit responsibly.
Making purchases that you can pay off is the key to using credit responsibly. While it may be tempting to use your credit card to purchase large-ticket products, this could quickly result in a bill you cannot pay. It also depletes your available credit, which you could need for something else.
Instead of making large purchases, use your credit card to make small purchases you know you will be able to pay off. If you want to use your credit card to buy a higher-priced item, come up with a plan to repay the charges before you make your purchase.
Missing a payment, making a late payment, or even making less than the minimum payment on your bill is all reported as missed payments to credit bureaus. This will have a negative impact on your credit score and could remain on your credit record for up to seven years.
To improve your credit score, you must use your credit card extensively. On the other hand, credit scores are based on persistent account activity rather than high numbers. Payment history and credit utilization are the two most important criteria in establishing your credit score.
Paying your expenses on time is critical, but it is also vital to spend your money wisely. Credit usage is the ratio of credit available to credit used. It is suggested that your credit utilization is at most 30% of your available credit. If you have a credit card with a $1,500 credit limit, you would only use $500 at a time.
Use your credit card like a debit card as a general rule to keep your spending in check. Make only purchases you know you can afford. Keeping your credit utilization low and paying off your credit card purchases regularly can keep your credit account active and your credit score in good standing.
Keep a close check on your account
One approach to keep track of your transactions, incentives, and bill due dates is to monitor your credit card account. It’s a good idea to monitor your credit account’s activity and balance on a regular basis. You can set up notifications for each time your card is used to make a purchase. This will allow you to keep track of your spending and balance, as well as swiftly warn you of any fraudulent purchases.
You should notify your card issuer immediately if you discover any suspicious charges. It’s possible that your account has been hacked. Failure to report suspicious behavior promptly may result in your account being maxed out, which will impact your credit score due to someone else’s bad behavior. It may also take longer for the problem to be resolved and for your score to improve.
Keep your credit report in check
It is critical to keep track of your progress when attempting to improve your credit score. You can accomplish this by requesting a credit report. You are entitled to a free credit report from one of the three reporting agencies (Experian, TransUnion, and Equifax) once a year. In light of the recent coronavirus outbreak, credit bureaus are issuing free weekly credit reports through April 2021.
Checking your credit report can allow you to keep track of your credit score and account activity. You’ll also get a breakdown of how you’re doing with the important credit score variables, which might help you increase your score further.
How long does it take to build credit as a student?
It usually takes less time than you expect to build a credit history. A credit card account can take three to six months to appear on your credit report. However, using the same bank or financial institution for other services, such as checking accounts and loans, may take less time. Then, to boost your credit score, you must focus on the most relevant elements in calculating your credit score.
These are all under your control and primarily rely on you to make wise credit card selections, pay on time, live within your means, and not try to access too much credit at once. Doing so consistently over time will help your credit improve.
Is having no credit better than having bad credit?
Yes. It is easier to establish a good first impression than it is to restore a bad one. Though some products, such as secured cards, exist to assist persons with damaged credit in rebuilding a damaged financial reputation, the road to success is lengthier than if you start completely new with a blank slate.
Risks involved in having a student credit with no credit
Student cards have lower credit limits and higher interest rates than other kinds of accounts, but with wise use, the advantages may eventually overpower the dangers. A student credit card carries three main risk factors. Thankfully, it’s simple to minimize these risks.
Extra fee. A student credit card may occasionally charge additional costs, like annual or foreign transaction fees. Always read the small print and ask questions when applying for a credit card, so you are aware of any fees.
Increased interest rates. Typically, the interest rate on your student credit card will be high. These interest rates could cost you a lot of money if you don’t pay your account in full each month.
Influence on credit score. Last but not least, failing to make payments on time can lower your credit score (at least at a minimum). To minimize these risks, think about establishing automatic credit card payments. Even so, you should continue to periodically review your statements to ensure that any charges made on your credit card are legitimate.
Alternative methods for students with no credit to get a credit card
Students without a credit history do not have to rely solely on student credit cards to obtain credit card approval. Here are some additional options for students to receive a credit card or begin establishing their credit history to improve their chances of being accepted.
Adding your name as an authorized user to someone else’s card
One approach to establishing a credit history with responsible use is to become an authorized user on a partner’s or family member’s credit card. Here’s how it works: you are added as an authorized user on the credit card account by the principal cardholder, after which you receive a card for transactions. Legally, the principal cardholder is responsible for making the payments, but obviously, you are bound to pay your portion of the expenses.
Remember that this arrangement carries some risks. The majority of the time, the activity of the primary cardholder will be reported to credit bureaus and included in your credit report. That consists of errors like late or missed payments done by the other party, which can harm your score.
Building your credit history by promptly repaying other debts, including co-signed loans, and invoices
You can improve your credit history by repaying loans and other forms of credit following their terms. For example, when you cosign for a car loan, the credit bureaus receive information about your repayment activities, and you are jointly responsible for making the loan payments. You can also enroll in programs that enable you to report timely payments to credit bureaus for bills that would not otherwise be reported, such as a cell phone plan.
Credit cards that are secured
Secured credit cards provide cardholders with a line of credit equivalent to the card’s refundable security deposit. For example, a secured credit card with a $500 deposit may have a $500 credit limit. This removes the lender’s risk, but if you default on payments, lenders can use your deposit as collateral to collect their losses. You can regain your deposit if you use the card properly and upgrade to a non-secured card.
Secured credit cards can benefit in a sense as payments on a secured credit card may be recorded to credit bureaus; properly using a secured credit card may help you create a credit history.
Student credit cards are specially designed keeping students in mind, which is why they are easier to get accepted for, being a student. The top student credit cards provide rewards for spending, welcome bonuses, travel and purchase protections, and incentives for making on-time payments.
As these credit cards are specifically for students, even if you have a low credit score or no credit history, you may be able to obtain a student credit card. Still, you may need to apply for a secured credit card at first, which you can use to establish credit until you are eligible for an unsecured credit card. Whatever actions you must take, building credit will be worthwhile in the end.