Credit Cards for Students with No Credit History
Key points about: the best credit card options for students with no credit
A student credit card may be the best credit card for students with no credit.
Student cards often come with lower credit limits and higher interest rates but might offer cash back rewards and intro APR (interest rate) offers.
Other options include getting a secured credit card or becoming an authorized user on someone else’s card.
Whether you’re trying to earn income while balancing class schedules or using student loans for living expenses, your cash flow as a student can be unpredictable. A credit card may help you cover costs while managing your budget. But as a college student, you may find it challenging to get a credit card. That’s because many credit cards require a credit history (a record of your past borrowing and repayments) that college students rarely have.
Luckily, many lenders recognize students’ limitations when applying for credit and offer solutions. A student credit card tops the list of best credit cards for students with no credit history—a secured credit card provides a second option. And if your credit card issuer reports your account activity to a credit bureau, both student and secured cards let you build good credit with responsible use,1 like making on-time payments and keeping your card balance low.
Why should you use a student or secured card to help build your credit history?
Credit card companies need a way to verify that you’re a trustworthy borrower. For many cards, your credit history (provided by a credit bureau to prospective lenders), including your credit score, helps a credit card issuer determine your eligibility for credit when you apply.
Generally speaking, the better your credit habits, the higher your credit score. And the higher your credit score, the more confidence a card issuer has that you’ll repay your credit card charges when they’re due. A higher credit score can result in a higher credit limit and lower interest rate.
On the other hand, a record of irresponsible credit use (resulting in a lower credit score) could signal to card issuers that you’re not likely to repay your debts. A bad credit score may limit the amount of credit you can get and result in a higher interest rate, or may keep you from getting any additional credit. For a college student with little credit history, building credit is key to broadening your credit card options. And checking your credit score can help you track how you’re doing.
Getting a student credit card with no credit history
Likely the most suitable credit card for students with no credit history, student credit cards are designed specifically for college students and don’t usually require a credit score to qualify. For instance, there’s no credit score required to apply for Discover student credit cards.3
What makes a student card more accessible is the often higher interest rates and typically lower credit limits (the total amount of money you can charge on your credit card) than traditional credit cards. But a low credit limit can help keep your debt in check while you build credit and learn to manage your first credit card. And if you make your payments on time and pay your balance each billing cycle, you can avoid paying interest.
Some student credit cards offer perks like cash back or travel rewards. A student cash back rewards credit card may even offer unlimited cash back on all purchases. In other words, student cash back cards can put money back in your pocket, money that can really add up.
For example, with the Discover it® Student Chrome card, you can earn 2% Cashback Bonus® at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically. Plus, earn 1% cash back on all other purchases – automatically.4
You may also receive an introductory offer when you sign up for a student credit card, such as 0% intro APR, which can help you avoid interest on balances you carry during the intro period. These offers can help you purchase and pay off more considerable expenses (think textbooks or furniture) over time, with no interest if you pay off your balance during the introductory period.
Getting a secured credit card with no credit history
If you need an alternative to a student credit card, secured credit cards offer some of the same benefits as student cards, like potential rewards and intro APR offers. Also similar to student credit cards, secured cards may have higher interest rates and lower credit limits than regular cards. And because you rarely need a credit score to apply, even borrowers with bad credit may qualify for a secured credit card.
However, a secured card’s credit limit works differently than a student card’s limit. Once secured cardholders get approved for a line of credit, they provide a refundable security deposit. For example, with the Discover It® Secured Credit Card, if approved for a $500 credit limit, the security deposit would also be $500. If you use the card responsibly, you can upgrade to an unsecured credit card (usually with the same features and terms) and reclaim your deposit.
While a secured card may seem like a debit card (where you use your cash for purchases), you’re actually borrowing and repaying money from your credit limit for purchases. Your refundable deposit simply secures the card. And unlike paying with a debit card, a secured credit card can help you build credit.
Becoming an authorized user on someone else’s credit card
If you can’t qualify for a student or secured credit card, consider becoming an authorized user on a partner or family member’s credit card. Being an authorized user gives you access to credit as a college student with no credit history and can also help you build credit. Here’s how it works: The primary cardholder adds you to the credit card account and designates you as an authorized user. Next, you get your own card to make purchases.
Legally, the primary cardholder is responsible for the payments, but they may expect you to cover your share of the charges. In most cases, the primary cardholder’s activity gets reported to one of the three major credit bureaus and added to your credit file. However, that includes missteps like missed or late payments, which could negatively impact your credit scores, like your FICO® Score.
If you’re a student with no credit history, you have choices when it comes to credit cards. Whether getting a student or secured credit card or becoming an authorized user, you can learn to manage credit and establish a good credit history when using your card responsibly. Whatever route you choose, you’ll be on your way to graduating with a promising financial future.
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