You can qualify for a credit card even if you’re trying to build your credit score. Credit cards for no credit allow you to qualify even if you don’t have a credit history or need to improve your score. Keep reading to find out which cards you should consider applying for and how to qualify for them.
The best cards if you’re trying to build credit
The best cards for building credit have the following features:
Report activity to credit bureaus
You’ll want to make sure your lender reports your activity to the two major credit bureaus, Equifax Canada and TransUnion Canada, so you can build your score.
Have low fees
Look for a card with low fees, such as no annual fee cards.
Offer free credit scores
Some lenders offer free access to check your credit score. This is important so you can assess how you’re progressing.
How to qualify for a credit card if you’re trying to build credit
Here are 4 steps to follow to qualify for a card when you’re building credit:
1. Check your credit score
You’ll want to check your credit score before you apply so you know which cards you qualify for. You’re entitled to free copies from both Equifax and TransUnion when you order your credit report over the phone or by mail. You can also get your credit report online, although it costs a fee.
2. Improve your credit score
Improving your credit score will allow you to qualify for more cards and perks. Two ways to increase your score include making card payments on time and maintaining a low credit utilization ratio.
3. Include all your income
When applying for a card, make sure to include all of your income. Lenders will look at your debt-to-income ratio when deciding whether to issue you a card, which is the amount of debt you have compared to the amount of money you bring in. Increasing your income or decreasing your debt will improve your ratio.
4. Shop around
Make sure to do your due diligence about cards, and don’t apply to too many cards at once. Each application can ding your credit score, so limit the amount of applications you send out.
Credit card alternatives for building credit
Here are a couple credit card alternatives if you’re trying to build or improve your credit score:
- Secured credit cards: With a secured card, you’ll put down a deposit that’s usually equal to your credit limit. Secured credit cards can help you build credit but are easier to get approved for than unsecured cards, since they are less risky for the lender. If you can’t pay your bills, the lender can take your deposit as payment.
- Become an authorized user: As an authorized user, you’ll be issued a card and have the ability to charge an account, but the payments are ultimately the responsibility of the primary cardholder.
