Karen Nunez
Ph.D., MBA, CMA, Associate Professor, Curi Capital Faculty Fellow, School of Business and Professional Studies, Shaw University
Financial institutions analyze an individual’s credit history to assess creditworthiness and ability to repay. When there is no credit history, there are no indicators of creditworthiness and ability to repay, so lenders are sometimes reluctant to extend credit.
No-credit-check cards are useful when you are trying to build or rebuild your credit history. In general, there is no reason to be suspicious of a no-credit-check card. A no-credit-check card has less strict approval criteria. New applicants generally do not have a credit history. If you are a new applicant and you have no credit history, applying for a no-credit-check card increases the likelihood of application approval.
Most no-credit-check cards are secured cards and a deposit is required. The deposit should be refundable. Also, consumers should compare a card’s annual fee and APR to similar cards.
It is hard to place a value on no-credit-check cards. But to the extent that an individual can build or rebuild their credit, there are several future benefits: access to traditional credit cards that do not require deposits, lower annual fees, higher credit lines, cards that offer rewards, and access to other types of credit.
