Credit Cards With No Credit Check
Believe it or not, there are plenty of ways of getting credit cards with no credit check. Not just credit cards, but any line of credit can usually be obtained with no credit check.
Let's take a second to understand credit scoring and why creditors use it.
Building credit is a matter of re-establishing your credit value to creditors. The easiest way to re-establish credit is to take on a line of credit and handle it responsibly. This will demonstrate to current and future creditors that you are "credit worthy". However, it seems like an impossible Catch-22 -- how can you get a credit card if your credit is already damaged?
Creditors approve lines of credit to consumers who fit a certain "credit profile". For better or worse, creditors assign you point values based on a wide variety of information about you. This information is usually found on credit applications or via credit scores kept by credit reporting bureaus.
Why do creditors use credit reporting bureaus? It is much cheaper for a creditor to make credit decisions based on a simple formula. It would be far too expensive for a creditor to hire thousands of humans to review each and every credit decision -- that's why your credit score and information are vitally important. Creditors can now take a quick glance at a few numbers and determine if you are credit worthy.
While credit scoring may seem unfair, creditors do it to determine if you are a credit risk or a potential source of income. The downside of credit scoring -- if your credit history or your information doesn't match what your creditor is looking for, you may have difficulty securing any line of credit.
What Creditors Look For
When considering your credit application, creditors look at a few specific pieces of information. This is just a sampling of the kind of data creditors consider when extending you a line of credit.
- Residence -- The longer you live in one home or apartment, the more stable you will appear to creditors.
- Geographic Location -- Your location in the country can affect how the other pieces of data are interpreted. If you live in an area with a high incidence of default, credit problems, foreclosure, or low income, your credit score will be affected.
- Occupation -- Creditors assign a different score for different jobs. Well-known employers and big companies tend to earn a higher score in this category. Also, steady employment is always a boon to your credit score.
- Age -- Until you pass the age of 40, your age will work against you. People under the age of 30 receive the lowest scores in the age category. This is because of stability and credit history issues. Most people under the age of 25 haven't had time to establish credit.
Understanding what creditors are looking for is a great way to understand your ability to earn credit, and the first step in securing a credit card with no credit check.
Displaying Credit Value to Avoid a Credit Check
Depending on what kind of creditor you're approaching for a credit card, you may be able to bypass the credit check simply by displaying a high value.
When applying for a credit card, have plenty of evidence of your ability to repay (a high income helps, and check stubs to prove this income), your job stability, your reliability (a long history of on-time bill and rent payments is a must), and your past good credit performance. If you've payed off a loan, a credit card, or have been making regular payments on debts, these are all marks in your favor. If you're dealing with a smaller credit company, or one that is willing to listen to your experience, you may be able to bypass the credit check entirely.
Tips to Making a Credit Application Look Good
I would never encourage anyone to lie on a credit application. That can lead to rejection of a line of credit, and possibly an embarrassing detail on your credit report. Instead, take some steps to make your real credit history look better.
One thing that many people skip out on is a telephone number. With cellular phones all the rage, many people simply don't have a "land line" installed. What they don't know is that creditors look at a home telephone as a good indicator of a person's stability and ability to pay a bill. If you don't have a home telephone, have one installed. This could boost your credit application above and beyond the level that would require a credit check.
Another tip -- list all of your incomes from various sources as a single number. It will make your income total stand out on an application, even if you only list one job under "employment".
Tailor your credit application to "good" uses of credit. Creditors consider loans for education, home improvement, medical treatment, and other "positive" reasons for taking a loan to be of the most value. Bad reasons for loans (that will almost always require a credit check) include debt consolidation, unsecured luxury item loans (boats, etc), money to pay legal fees, etc.
Secured Credit Cards
The last option you may have for getting a credit card without a credit check is to take on a "secured credit card". These are bank cards that are usually issued by banks and are "secured" by an open savings account.
Any funds you place into the savings account are frozen as long as you keep an outstanding balance on the secured credit card. This means that the savings account you open to secure the card is the security against your potential non payment. In other words -- the creditor isn't taking a risk, because if you don't pay, the money comes right out of the frozen savings account. By reducing risk to the creditor to nearly zero, secured credit cards provide people with bad credit a way to improve their credit score without undergoing a credit check.
Banks that offer secured credit cards lower their standards for offering lines of credit. Generally, this means no credit check, and a credit card limit equal to the size of the savings account you plan to secure the card with.
The next time you're looking to secure a line of credit or take out a credit card without a credit check, consider altering your search or tailoring the information on your application to avoid the dreaded credit crunch . People with poor credit who need to improve their credit score can use these methods to secure a future rich with credit -- and people who already have good credit can use these methods to keep a ton of harmful "credit checks" off their credit history.