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Building Credit Without a Credit Card

Ask Savvy: Why Was My Credit Card Application Denied? Part I

Dear Savvy,

I'm new at this credit thing and I'm not sure when or why I should check my credit report. I have never had a credit card (still don't) but I got denied for one a few weeks ago and I don't know why. Does checking my credit report worsen my credit score? Does getting denied for a card? How often should I check my credit report and/or score? What's the difference?! Obviously I am not financially savvy! No one ever explained to me how to manage credit so now I'm trying to get some and I'm completely lost!

To see my answer just


You're on the right track in thinking that your credit report has something to do with why your application was denied, but it's not because you have bad credit. It's that you don't have any credit attached to your name. In order be given access to credit you need a credit history showing how you handled your finances, and that information is used by credit card companies to determine your eligibility.

If you don't already have checking and savings accounts, that's step one. Just because your credit card application was denied it doesn't mean you'll never be able to carry a card of your own. Apply for a secured credit card, which works differently than a regular card— instead of the company giving you a limit, they require that you deposit money and then your credit limit is equal to the deposit.

Check out Bankrate's list of secured credit issuers and pick a card with low fees, will convert to a regular credit card after about a year of punctual payments, and will be reported to the credit bureaus because (otherwise you wouldn't be building a credit history). If you use a credit union, ask them about any secured card before you look at other sources.

Once you do get a regular credit card, make sure that you use it responsibly by charging only what you can afford, never using more than 30 percent of your limit, and paying off your balance each month, and paying your bills on time.

Check back in a bit for my explanation to the other part of your question regarding credit report versus credit score.


Join The Conversation
dancing247 dancing247 8 years
WHY is everyone so concerned with this person getting a copy of their credit report? If they are just starting out, there will be nothing to look at. What's the point in wasting the time to do that. Only if she/he would have a family member that would steal their identity should you waste time on this. It was recommended to go to a credit union for a credit card. The unfortunate part of that is there are actually still small town credit unions that DO NOT report to credit bureaus getting you no recognition whatsoever for your great payment skills. Everyone says to go to a bank, ask to borrow money, but don't actually take all the money and make payments to build credit. My brother bought a brand new truck at 18 because I unknowingly to them put him and my sister on my credit cards as authorized buyers when they were 14 & 16. By the time he hit 18, he had 4 years of credit with high credit established and a great payment history. I encourage parents who pay their credit cards on time to do this for their kids as well as educate them about credit. If you are just starting out with credit and know someone who pays their credit cards on time, ask them to put you on their cards and make sure they understand you are not trying to charge ANYTHING on their card. That's not what this is about.
sweetpeabrina sweetpeabrina 9 years
Along with what everyone else says, once you've been denied credit, you should receive a letter in the mail that tells you why you have been denied. It also tells you that you're eligible for a free credit report.
SDTransplant SDTransplant 9 years
An alternative to getting a secured credit card is asking someone you trust (and who trusts you) with good credit history to be your co-applicant. My mom helped me apply for two credit cards when I was in college and that helped me build my credit. I've now taken her name off those accounts since my credit score is in good standing. I would only recommend doing this though if you're able to make at least the minimum payment every month (though it's always better to pay off the credit card balance every month if you can) because if the account ever goes delinquent, those lovely creditors can go after your co-signer to pony up the money.
theresasp theresasp 9 years
If you have no credit you will have to build it. To build your credit pretty quickly, first apply for a store card, Macys, Target, etc.. easier to get then a Visa or Mastercard. Use the card, buy something say for $100 and make monthly payments say at $33 or so then when paid off purchase again, You will need to build a payment history not just have the card but use it and make payments (but do not go over 1/2 of the credit limit ... another thing used in your credit score). In 6 months to a year you should qualify for a Visa or Mastercard. You could also do the same routine with a secured Visa or Mastercard, USBank and BA have a secured card program. Also some other bills will show on your credit report ... I think even utilities may ... so, a credit rejection letter may say credit card was deliquent when it was a different type of revolving account, like a car loan etc... But you should check in case of mistakes or identiy theft! Also, if you have a parent with good credit have them put you on one of their accounts ... they don't even have to give you a card and your credit score will go up. I did this for my 20 year old daughter so she could start a credit history. She now has qualified for WAMU Visa with low interest rate. Good luck, Theresa
mguy414 mguy414 9 years
This sounds like me! I applied for a credit card about a month ago and they said I was denied because I have a delinquent payment on one of my other credit cards. The only problem is that I have never had a credit card!
cubadog cubadog 9 years
Look at your credit report to make sure no one has borrowed your identity and a lot of it has to do with not having any credit history at all. It can be just as bad as having bad credit.
bellaressa bellaressa 9 years
Get your credit report, since you were denied you are eligible for a free one. It does not go against your credit score. Once your credit report is clean just pay attention to Savvy's advice.
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