How Do I Build Credit When No One Will Give Me A Credit Card?

Clarice is financially recovering from a divorce. Her husband handled all the finances, and it turns out that he had a card in her name but never paid off a $300 outstanding balance on it. Besides this card, she’s never had a credit card. Now she wants one and no one will give it to her, because of the outstanding derogatory item and lack of credit history. She’s tried applying for credit cards online, with her bank and with stores. She could get a co-sign from her father but “doesn’t want to wrap him up in all of this.” What can Clarice do? Well, the last thing she can try is to apply for a secured credit card.

A secured credit card is one where the lender requires you to deposit money to get access to the line of credit. Your credit limit is usually equal to the amount of money you put down. You want to look for one:

- with no application fee and a low annual fee
- that converts to a regular unsecured credit card after 12-18 months of on-time payments
- and most importantly, reports to all 3 credit bureaus.

Bankrate and Credit.com are good places to start looking for one of these cards.

BIG WARNING: Since secured credit cards cater to the unbanked and financially unsophisticated, this market is rife with hidden fees and punitive rates. Scope out potentially lenders super-carefully and take a fine-tooth comb to the fine print.

As regards the $300 outstanding balance, commenter wcnghj suggests, “File a police report for ID theft, and forward it to the big three CRAs, and the card issuer. It will go away. When it’s gone, apply for an easy to get card like the Macys store card”