How to Get a Credit Card with No Credit History: A Step-by-Step Guide

Getting your first credit card with no credit history can feel challenging, but it's a key step toward building a strong financial future. A credit card can help you establish your credit score, manage expenses, and access various benefits—yet getting approved without an existing credit record requires some strategy. This guide walks you through each step to secure a credit card, even if you’re starting your credit journey with no credit history.

Understanding Credit History

Your credit history documents your financial behaviours related to borrowing and repaying debt. It includes information on any loans, credit cards, and other credit accounts you have, along with details like payment history, credit limits, and outstanding balances. Lenders use this history to evaluate how likely you are to repay future debts.

What is Credit History?

Credit history reflects your track record of managing credit and is maintained by credit bureaus. This report includes information like payment consistency, types of credit used, the length of your credit relationships, and any instances of debt default or bankruptcy. All of this data influences your overall credit score.

Why is Credit History Important?

Credit history is essential because it affects your access to financial products like credit cards, loans, and mortgages. Lenders review your credit history to assess the level of risk in extending credit to you. A strong credit history can help you qualify for better interest rates and higher credit limits, saving you money in the long run. Conversely, a lack of credit history or a poor credit record can make it harder to access credit and may lead to higher interest rates. Building a positive credit history is crucial for achieving financial goals, from securing a car loan to purchasing a home.

What is an Average Credit Score?

In Canada, the average credit score generally falls between 660 and 724 on the FICO and Equifax scoring systems, which range from 300 to 900. A score within this range is typically considered "good," allowing access to a broad range of credit products at favourable rates.

Here’s a general breakdown of credit score ranges in Canada:

• Poor: 300–559

• Fair: 560–659

• Good: 660–724

• Very Good: 725–759

• Excellent: 760–900

A higher credit score often means better creditworthiness in the eyes of lenders, enabling access to loans, credit cards, and mortgages with better interest rates. Regularly monitoring and managing your credit score is essential for maintaining or improving it.

Types of Credit Cards for Beginners

Certain credit cards are designed to help you build a positive credit history or qualify for a card with bad credit. These beginner-friendly cards come with specific features and requirements that make them accessible to people with limited or no credit experience.

Secured Credit Cards

Secured credit cards are ideal for those starting with no credit history. To open a secured card, provide a refundable security deposit, which acts as your credit limit. For instance, if you deposit $300, that becomes your credit line. Since the deposit reduces the lender's risk, secured cards are often easier to qualify. By using the card responsibly, you can begin building a solid credit history.

Student Credit Cards

Student credit cards are specifically designed for college or university students with limited credit history. These cards often come with lower credit limits, simple rewards, and no annual fees, making them manageable for beginners. Many student credit cards also offer perks like cash back on common student expenses (e.g., dining, groceries) and educational resources to help users develop healthy credit habits. By maintaining a good payment history, student cardholders can start building their credit while still in school.

Applying for a Credit Card

When you’re ready to apply for a credit card, be prepared and informed to increase your chances of approval. Here are two important steps to get you started.

Gathering Information

Before applying, gather all necessary information to streamline the application process. You’ll typically need personal details like your full name, address, and Social Insurance Number, as well as financial information such as your income and employment status. This data helps the credit card issuer assess your ability to manage credit and repay any debt.

Choosing a Credit Card Issuer

When choosing a credit card issuer, weigh the pros and cons, consider options that align with your financial goals, and offer accessible features for beginners. KOHO, for example, is a Canadian financial service provider offering prepaid credit cards focused on helping users build credit, track spending, and manage money effectively.

KOHO’s card options are designed to work similarly to credit cards, allowing you to make everyday purchases while building positive financial habits without the risk of high-interest debt. They also offer unique perks like cash back on purchases, budgeting tools, and easy-to-use financial insights. By choosing a card issuer like KOHO, you can access beginner-friendly features that support your journey toward building a strong credit history.

Alternative Ways to Access Credit

If you’re not yet ready for a traditional credit card, there are alternative ways to start building credit. These options can help you establish a credit history and improve your credit score without directly applying for a card.

Authorized User

Becoming an authorized user on someone else’s credit card is a great way to build credit. An authorized user can access a card linked to the primary cardholder’s account, though the primary cardholder remains responsible for payments. When the account is in good standing, the positive payment history is often reported to credit bureaus, which can help you build credit. It’s essential to confirm that the card issuer reports authorized user activity to the credit bureaus, as not all do.

Credit-Builder Loan

A credit-builder loan is a small loan designed to help people build credit. Unlike traditional loans, the funds are held in a savings account or certificate of deposit, and you make monthly payments until the loan is repaid. Once fully paid, you receive the money, along with a positive payment history on your credit report. This can be an effective way to establish credit without needing to qualify for a credit card, and it demonstrates your ability to make regular, on-time payments.

Managing Your Credit Card Account

Once you have a credit card, effective management is key to building and maintaining a strong credit score. Here are two essential practices to keep your account in good standing.

Making Payments and Keeping Utilization Low

Making timely payments is one of the most important aspects of managing a credit card. Always pay at least the minimum amount due each month to avoid late fees and negative impacts on your credit score. Aim to pay off your balance in full to avoid interest charges.

Additionally, keeping your credit utilization low—ideally under 30% of your available credit limit—can positively impact your credit score. For instance, if your credit limit is $1,000, try to keep your balance below $300. Low utilization signals responsible credit use to lenders and boosts your credit profile.

Monitoring Your Credit Report

Regularly monitoring your credit report is essential to stay informed about your credit status and catching any errors or signs of fraud. You’re entitled to free credit reports from major credit bureaus in Canada annually, so take advantage of this opportunity. Many credit card issuers, including options like KOHO, offer tools to help you track your credit score and activity. Keeping a close eye on your report helps you spot inaccuracies or unauthorized activity early.

Credit Card Features to Consider

When selecting a credit card, it’s essential to understand the various fees and features that can impact your overall cost and user experience. Here are two key fees to consider.

Annual Fees and Foreign Transaction Fees

Some credit cards come with an annual fee, which is a fixed charge billed every year for using the card. Cards with annual fees often offer premium rewards or perks, such as travel benefits, higher cashback rates, or exclusive access to events. If you’re a beginner or have a limited budget, you may want to start with a no-annual-fee card. However, if the benefits outweigh the cost and align with your spending habits, a card with an annual fee could still be worthwhile.

Foreign transaction fees apply to purchases made in a foreign currency or through international merchants, typically around 2-3% of each transaction. These fees can add up quickly if you frequently travel or shop online with international vendors. Many credit cards for travellers or online shoppers offer no foreign transaction fees, saving you money on international purchases. Look for a card that matches your spending habits to minimize these fees and make the most of your credit card use.

Final Tips and Reminders

Building a strong credit foundation takes time and consistency. As you start using your credit card, keep these final tips in mind to set yourself up for success.

Building a Positive Credit History

Establishing a positive credit history is all about making responsible choices over time. Consistently paying your bills on time and keeping your credit utilization low are two of the most impactful ways to boost your credit profile. Remember, each positive action—such as making timely payments and avoiding high balances—adds to your credibility in the eyes of lenders. Building a good credit history now can open doors to better financial products, loans, and interest rates in the future.

Credit Limit and Creditworthiness

Your credit limit is the maximum amount you can borrow on your card, and how you manage this limit influences your creditworthiness. While you can protect yourself with overdraft protection coverage, keeping your balance below 30% of your limit shows lenders that you can use credit responsibly. If you’re offered a credit limit increase, assess whether it fits your needs, as it could help lower your utilization rate and improve your credit score if managed well. By maintaining a responsible approach to your credit limit, you demonstrate to lenders that you’re a low-risk borrower, which can positively affect your creditworthiness over time.

Start Building Your Credit with KOHO

Getting your first credit card with no credit history might seem challenging, but with the right steps, you can start building a solid foundation for your financial future. KOHO makes it easier by offering tools and products designed for newcomers to credit. KOHO’s virtual credit card and innovative spending and saving tools help you track your finances, build credit responsibly, and access cash-back rewards—all without the risk of traditional high-interest debt.

Whether you’re using KOHO’s budgeting features, monitoring your credit score, saving up for something big in the high-interest savings account, or earning cash back on everyday purchases, KOHO empowers you to take control of your financial journey from the start. You’re not just getting a card—you’re gaining a partner in building a secure and successful credit future.