If you're new to the credit realm and have no credit on record, you might be tempted to get a credit card to test the waters.  You'll likely receive numerous offers in the mail stating that you can get low or zero percent introductory interest rates.  These sound great, but with no credit at all, it's unlikely that you will get approved for these incredible offers.  The same holds true when you have bad credit or a low credit score.

Although credit offers seem to be a dime a dozen, each card issuing bank will take the time to determine your credit worthiness before approving you for a card.  Any type of lender will consider the risk involved before lending money.  If they feel you are a high risk borrower due to a low credit rating or other factors, the credit card company will either deny your application or approve you only on the basis of very high interest rates.

Factors to be Considered

There are several factors that a credit card issuer will consider when determining approval or denial.  The company will pull a copy of your credit report and obtain your credit score.  They will also consider your current debt-to-income ratio, job history, established income level, whether or not you're a homeowner, and how long you've lived at your current residence.  The card issuer will also check to see if you have already applied numerous times for credit.  If there are tax liens or any collections or judgments on your credit report, these will be considered as well.

Two Possibilities to Build or Repair Credit

In the event that you have no credit or poor credit, consider getting either a secured credit card or a secured personal loan.  Either of these can help you to establish credit so long as you pay the balance due on time every time.  These are called "secured" because they require you to secure the loan or credit with a certain dollar amount of your own.  You must deposit a certain amount into a special savings account and cannot exceed that amount on any given balance.  Although you're basically paying for your own credit, your on-time payments will be reported to the credit bureaus.

Too Many Inquiries - Beware

Don't fall into the trap of applying to four or five credit card companies at once.  Having too many credit inquiries can lower your credit score even more.  If you already know your credit is bad or you have no established credit, it's best to go ahead and get a secured card.  If you're not sure, only apply to one card company, preferably a mainstream company.  This will let you know how you stand as far as credit goes.  Keep in mind that even if approved, your interest rates may be higher than advertised if you have no credit or bad credit.

Whether you get a secured card or an unsecured card, use it wisely.  Keep your balances paid in full each month so interest won't pile up.  Also, use the card on several small purchases each month instead of one big purchase.  This may boost you credit standing even more.

Even with no credit or a bad rating, you can use credit cards to establish credit and get back on track with your finances.