Credit cards you can get without a credit rating
When assessing an application, credit card companies rely heavily on the person’s credit rating, or their record of repaying debts. A credit score is a good predictor of how likely a credit card holder is to default in the future.
This creates a catch-22 situation for the person who does not have a credit rating. As banks and other lenders rely on credit ratings, then a nonexistent or patchy one makes it difficult to be accepted for a credit card with which to earn a credit rating.
Various categories of people may find themselves in this situation. Recent immigrants to Australia will find they have no credit rating even though they may have earned a top-notch one in their old home nation, as credit ratings are not international. Young, people and many students do not have credit records, as they are just entering the financial world, or the rating they do have doesn’t cover a sufficient length of time to be a true indication of their future repayment behaviour.
But even in this situation, there are different cards available for a person without a credit rating. It must be remembered that these cards tend to be more expensive than standard credit cards.
There are some credit cards that are marketed toward people without a credit score, particularly students or recent immigrants. Other cards are marketed on the basis that they will be issued even if the applicant does not have a credit score, or has a low credit score. Again, these cards tend to be expensive.
Store cards are another option for people without credit, as they can be easy to obtain when they are applied for in the store. These store cards are often a good way to earn and maintain a credit rating. If the person has some savings to deposit, a secured credit card may be an option, as in that case the debt is backed by funds lodged with the credit card provider.
Prepaid cards and debit cards are not very useful for building a credit record, but they do allow for transactions within the credit card system.