You can get a credit card without an existing credit history, but your options are narrower and your interest rate will be higher

A credit card company looks at your credit history to decide whether to trust you with borrowed money. If you have never borrowed money before — or if your old accounts have fallen off your report — you have no history for them to check. This does not mean you cannot get a card. It means you will likely start with a secured credit card, which requires you to put down a cash deposit, or an unsecured card for people new to credit, which does not require a deposit but comes with a higher interest rate and lower credit limit.

The goal of either card is the same: to build a credit history. Every payment you make gets reported to the three credit bureaus (Equifax, Experian, and TransUnion). After 6 to 12 months of on-time payments, you will have enough history for a regular credit card company to consider you, and you can move to a card with better terms.

Key Takeaways

  • A secured credit card requires a cash deposit (usually $200 to $2,500) that becomes your credit limit, and most issuers will convert it to a regular card after 12 months of on-time payments.
  • Unsecured cards for people new to credit do not require a deposit but charge higher interest rates (often 20% or more) and come with lower credit limits.
  • Every payment you make — on time or late — is reported to Equifax, Experian, and TransUnion, so a secured card is a practical way to build a credit file from scratch.
  • Your credit limit on a secured card is tied directly to your deposit, so if you deposit $500, your limit is $500.
  • After 6 to 12 months of on-time payments, you can ask your issuer to convert your secured card to an unsecured one, or you can close it and move to a better card elsewhere.

How a Secured Credit Card Works

A secured credit card is the most straightforward path when you have no credit history. You open an account with a bank or credit card company, deposit money into a savings account they hold, and that deposit becomes your credit limit. If you deposit $500, you get a $500 credit limit. You then use the card like any other credit card — swipe it, pay the bill each month — and the issuer reports your activity to the credit bureaus.

The deposit stays in the bank's account and earns a small amount of interest (usually 0.01% to 0.5% per year, depending on the bank). You cannot touch it while the account is open. If you close the account or the issuer converts it to an unsecured card, you get the deposit back. The deposit is not a fee; it is collateral that protects the bank if you stop paying.

Most secured cards charge an annual fee ($0 to $95, depending on the issuer) and a higher interest rate than a regular card (often 18% to 24%). If you carry a balance, you will pay interest on it. The strategy is to use the card for small purchases you can pay off in full each month, so you never pay interest and you build a clean payment history.

Unsecured Cards for People New to Credit

Some card issuers offer unsecured cards designed for people with no credit history. These cards do not require a deposit. Instead, the issuer takes the risk that you will pay them back, and charges you a higher interest rate to cover that risk. Interest rates on these cards often start at 20% or higher, and credit limits are usually low ($300 to $500).

The trade-off is clear: you do not have to put down cash upfront, but you pay more if you carry a balance. Like a secured card, every payment is reported to the credit bureaus, so you are building the same credit history. The main reason to choose an unsecured card over a secured one is if you cannot afford to set aside a deposit right now.

Be cautious with unsecured cards marketed to people with no credit. Some charge high annual fees ($25 to $99) on top of the high interest rate. Read the terms carefully before you sign up. A secured card from a mainstream bank often costs less overall, even though it requires a deposit.

What Happens After You Build Credit

After 6 to 12 months of on-time payments, your credit history will be strong enough that you can move to a better card. At that point, you have two choices: ask your current issuer to convert your secured card to an unsecured one, or close the account and open a new card elsewhere with better terms.

Many issuers will convert your secured card automatically once you have shown a solid payment history. When they do, your deposit is returned to you, and your credit limit may increase. Some issuers will also lower your interest rate. If your issuer does not offer to convert, you can call and ask. If they say no, you can close the account and move on.

Closing a secured card does have a small impact on your credit score — it reduces the average age of your accounts and lowers your total available credit. But if you are moving to a better card with a lower interest rate and no annual fee, the long-term benefit outweighs the short-term dip. Your score will recover within a few months.

Building Credit Without Carrying a Balance

The fastest way to build credit is to use your card for small purchases and pay the full balance every month. This shows lenders that you can borrow money and pay it back reliably. You also avoid paying interest, which means the card costs you nothing except the annual fee (if there is one).

A common mistake is to think you need to carry a balance to build credit. You do not. Paying in full every month is actually better for your credit score than carrying a balance. The credit bureaus care about whether you pay on time, not whether you pay interest.

Set up automatic payments if your card issuer offers them. This removes the risk of forgetting a payment. Even one late payment can damage your credit score and make it harder to move to a better card later. If you are worried about overspending, use your card only for one regular expense — gas, groceries, or a subscription — and pay it off in full when the bill arrives.

Comparing Secured Cards From Different Banks

Not all secured cards are the same. Before you open an account, compare the annual fee, interest rate, and deposit requirements across a few issuers. A card with no annual fee and a lower interest rate is worth choosing, even if it requires a slightly larger deposit.

Some banks that offer secured cards include Capital One, Discover, and various credit unions. Capital One's Secured Mastercard has no annual fee and reports to all three credit bureaus. Discover's Secured Card also has no annual fee and offers cash back on purchases. Credit unions often have lower fees and interest rates than big banks, so check whether you are a member of one or whether you can join.

Read the fine print on the issuer's website. Look for the annual percentage rate (APR), the annual fee, the minimum deposit, and whether the issuer reports to all three credit bureaus. If an issuer reports to only one bureau, your credit history will build more slowly, so choose one that reports to all three.

Common Mistakes to Avoid

The biggest mistake is missing a payment. Even one late payment will be reported to the credit bureaus and will damage your credit score. Set a calendar reminder or automatic payment so you never miss a due date. If you do miss a payment, call the issuer right away and ask whether they will waive the late fee as a one-time courtesy. Some will, especially if it is your first mistake.

Another mistake is maxing out your credit limit. If your limit is $500 and you charge $500, your credit utilization is 100%, which hurts your credit score. Try to keep your balance below 30% of your limit — so if your limit is $500, keep your balance below $150. This shows lenders that you can borrow money without relying on credit to survive.

Do not open multiple secured cards at once. Each application triggers a hard inquiry on your credit report, which lowers your score slightly. If you need more credit, wait 6 to 12 months, build a history with your first card, and then open a second one if you still need it.

Frequently Asked Questions

Can I get a regular credit card if I have never borrowed money before?

Most mainstream credit card companies will not approve you without any credit history. A few issuers offer unsecured cards for people new to credit, but they charge higher interest rates and lower credit limits. A secured card is usually easier to get approved for and often costs less overall.

What if I cannot afford to put down a deposit right now?

An unsecured card for people new to credit does not require a deposit. The trade-off is a higher interest rate (often 20% or more). If you can wait a few months to save up a deposit, a secured card usually has lower fees and interest rates, so it is worth the wait.

How long does it take to build enough credit to get a regular card?

Most issuers will consider converting your secured card to an unsecured one after 6 to 12 months of on-time payments. Some may take longer. After you have a year of history, you should be able to open a regular card from another issuer, even if your current issuer is not ready to convert.

Will closing my secured card hurt my credit score?

Closing any credit card lowers your score slightly because it reduces your total available credit and the average age of your accounts. But the impact is temporary — your score will recover within a few months. If you are moving to a better card with lower interest rates and fees, the long-term benefit is worth the short-term dip.

What if I miss a payment on my secured card?

A missed payment will be reported to all three credit bureaus and will damage your credit score. Call your issuer right away and ask whether they will waive the late fee. If you can, pay the full balance immediately. After that, set up automatic payments so it does not happen again.