Guest Post: I Have No Credit

This is a guest post from my friend Will at Former Banker. Check out his site - it’s new and quickly filling up with posts about everything from video games to real estate.


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I have no credit! This is not a cry for help. Heck, I’m not even in the least apologetic about it. That’s just the way it is, and will be for the foreseeable future. I have tried to get credit and build a credit history. I’ve just never been given the opportunity to get the ball rolling. And I’ve stopped trying.


J.P. Morgan Chase is my bank. That’s where I keep my personal and business accounts, so it stands to reason that they would be my first choice for getting a credit card. Unfortunately, their credit approval process is based on credit history. Since I have no credit history, I can’t get a credit card from them. They don’t offer secured credit cards.


After a shopping spree in preparation for a job interview last summer, the gentleman at the register strongly suggested I apply for a Macy’s card. I thought “Why not” and did. I was told that basically everyone gets approved for those cards, so I was optimistic. I would finally get the chance to start building my credit. About a week later, I received a letter stating that my application had been declined for insufficient credit history.

Bank of America Part I

Earlier this year I got an offer in the mail from Bank of America for a credit card. I got all excited and failed to notice that it wasn’t a pre-approved offer. After going through the whole application process over the phone, the lady matter-of-factly informed me that I was declined because of insufficient credit history.

“But you guys sent me the offer!” I said. That’s when I learned that the marketing and credit divisions work independently (which is of course the best way to do things, right?).

Bank of America Part II

This summer, I decided that, well, it was time for me to do something about this “no credit” business. So I decided to go back to Bank of America, explain my situation, and apply for a secured credit card. I opened an account with them, signed all the documentation, and was told that within 2 weeks I would receive my credit card. Off I went, but the credit card never came.

When I called the credit division to find out what was going on, I was told that the branch where I had applied had to use the deposit to write a money order, which would be sent to the credit department along with my application. They apparently hadn’t received anything. I believe my application was somehow lost because months after I had applied, my deposit was still there and available for me to spend. Of course I spent it!

Out of the blue, shortly thereafter, I received a letter from Bank of America. I had been pre-approved for a secured credit card!!! I ignored it.

What are the cons of having no credit?

  1. I have to be ready for ANY emergency life throws at me. I don’t have the option of charging anything and paying for it later. I either have to have the money or be able borrow it.
  2. Renting a car with a debit card is not easy. The companies that allow you to reserve the car with a debit card usually have hefty deposit requirements, which sort of defeats the purpose if you’re on vacation and need access to your money.
  3. Many hotels require a credit card on file when checking in. Last summer I went to South Beach with my girlfriend. Even though our stay was entirely paid for, the hotel insisted they have a credit card on file for any damages to the room. My girlfriend provided hers and all was well, but the point is they wouldn’t have accepted my debit card.

What are the pros of having no credit?

  1. I have no debt! No need to elaborate on that.
  2. I am forced to adjust my lifestyle to my income. If I can’t pay for something in cash, I can’t go ahead and buy it anyway. The aforementioned trip was a gift to my girlfriend: I had to have the cash on my account in order to book it. I couldn’t charge it and then worry about it later.

Personal considerations

Having no credit really hurts when I’m investing in my business. Having access to a credit card or line of credit would have allowed me to make it grow much more rapidly.

Living with no credit is not an optimal situation. I am well aware of the limitations that come with it and it’s something I plan on addressing in the future. On the other hand, I think I’ve done pretty well without it, since it forces me to be more disciplined with my money and what I can afford.

Do you have a “living with no credit” story? What do you think is worse, having no credit, or having bad credit? Feel free to sound off in the comments.

20 Responses to “Guest Post: I Have No Credit”

  1. Shaun @ Money Cactus says:

    Great way to go if you are just plain bad with money, but if you aren't a credit card can be very useful and provide some nice rewards as well. It is actually not a bad idea to get a card, even with a very low limit just to develop your credit history.  It help getting other loans (for investing / buying a house) a lot easier later on.

    • Will says:

      I'm not bad with money (any more). While I was working at a bank as a finance professional, I maxed out my first credit card and had to be bailed out by my father! I got much better now, lol…

      I do plan on building some history, for future things like buying a house. I'm pretty sure I'll be buying a used car and paying cash for it. I've sort of adjusted to the cash lifestyle. Unfortunately I'm not a a place where I could pay cash for a home. Wait, maybe I should aim for that!!! :-)

  2. Shaun @ Money Cactus says:

    Great way to go if you are just plain bad with money, but if you aren’t a credit card can be very useful and provide some nice rewards as well. It is actually not a bad idea to get a card, even with a very low limit just to develop your credit history. It help getting other loans (for investing / buying a house) a lot easier later on.

  3. Jeffrey Trull says:

    What about secured credit cards? I don't know much about them, but I wonder if that's a solution for building your credit back up at least.

    I think no credit might be better than bad credit. At least you have a shot to start from scratch and build a good record without having bad marks on your credit report already.

    • Will says:

      I am going to apply for a secured credit card. It's just not gonna be with Bank of America, lol… I'm eyeing Citibank. Hopefully my application doesn't "disappear".

  4. Tessa says:

    Buying a car is a great way to build credit! This might not work if you don't need a car, but still…
    I would think that Chase would approve you for a card if you had a personal banking relationship with them. I guess that's the difference between big banks and small banks or credit unions.

    • Will says:

      Yeah, based on the business I do with them, I would expect a credit card, even one with a $300 limit. But like you said, that's the difference between being a number and being a customer.

  5. Newlyweds on a Budge says:

    wow i've never been in that situation. i had my first credit card at 14, and have always managed it correctly. i just wouldn't know what to do if i didn't have credit!

    • Will says:

      I haven't even had the chance to mismanage mine. At least not here in the U.S. When I messed up my credit card I was living in Haiti :-)

  6. MLISunderstanding says:

    Oh, you hit on one of my pet peeves!

    I had some difficulty renting my first apartment on my own (I'd had a parent as a co-signer in college, and then rented from a family member for a few years after graduation), because I did not have a credit history. Even though I had a steady, well-paying job and no debt (and could prove that!), landlords didn't want to take a chance on me. UGH.

    I also had an experience similar to yours with the pre-approval letter: I sent in an application for a card specifically marketed to student and those with little to no credit history and was rejected — because I didn't have any revolving credit balances. (I KNOW that! That's why I picked this card!!)

    In my favor:
    -Obviously, no consumer debt.
    -I also paid off my undergraduate loans 5 years after school (including one year of unemployment and deferral).
    -I was added as an additional cardholder to my then-girlfriend's account, to have a card for emergencies (she knew me well enough to know that I'd pay her back, even without a high credit score). Even though I never spent a dime on that card, it upped my available credit balance and extended my credit history by something like 12 YEARS.

    American Express approved me for a JetBlue card (useful for the points; I was flying between SFO and LGB a lot to visit my sweetie) last year. I used it as much as possible and paid it off early every month, and then cancelled it instead of renewing this year, because I didn't want to pay an annual fee, and they wouldn't waive it. Now that I had a good credit score, I was approved for a Chase Freedom card (Chase is also where I bank) which came with a cash-back bonus without needing me to change my spending habits.

    I'm not a big consumer. I think it's acceptable to go into debt for a house or for education (and I plan to graduate debt-free with my Master's by paying off my loans before the no-interest period ends), but I pay cash (or its equivalent) for everything else. I think a credit-based economy is DUMB. But it's more convenient, if not completely necessary, to have access to credit if you need it. (My mother was the worst about this in college — I got more nagging from her to open a credit card than from any marketer on campus or by mail!)

    • Will says:

      My gf also wants me to get one. I want one but like I said, I've adjusted to living with cash.

      I had forgotten about renting an apartment. I have a very good living arrangement right now but I don't want to stay here forever. I'll cross that bridge when I get there :-)

  7. Melissa says:

    Ach, that must be so frustrating, but I imagine you're on such better footing without the ability to fall into credit card debt. It can be a hassle, though. I recall someone once telling me that, as a young adult, the best time to get a credit card is after you turn 18, but before you start university (and start having bills, debt, no income, etc.) So I took the advice, and got one. No biggie. I got a $500 limit, and then $1000, and then  it was upgraded to $5000 before I turned 20 (I think that's still the limit) and I have never had any problems. But I know friends that tried to get credit cards in first and second year and had a heck of a time! No one wanted to give a card to someone who had a ton of tuition bills and rent to take care of, and (often) no job!

    It's good advice, I think. If a teenager is otherwise financially responsible, they should get a credit card ASAP, just to be able to start building that credit history and have the ability to borrow more later if necessary.

  8. Eric says:

    All banks can't be like this or no one would ever get a first credit card. I got my first card in college from Wells Fargo when I got a new checking and savings account there. The limit was low, but it helped me get started on a path to where I am today with a credit score over 750.

  9. AmericanDebtProject says:

    I just got back from my first vacation with no spending on credit cards, and I almost had a heart attack the first day when the car rental agency wanted a $1500 security deposit! My credit card (which I brought only for the car rental deposit) didn't have that much credit available. We had to go back to the airport and haggle with a few people until I finally got Thrifty down to a $700 deposit and a cheaper rate for the car.  In the old days of free credit spending, I wouldn't have blinked at the deposit and paid the first rate  I was quoted for the car.  I'm glad I didn't have the credit available, I ended up getting a better deal and the Thrifty guys were much more polite!

  10. Matt, Tao of Unfear says:

    Wow. Just had a conversation with a friend who finally got their first card. I got my first card shortly after I turned 18 (about 6 years ago), and never had any problems getting it (or other cards). I've also never had a problem with managing my money.

    Now that I don't have a regular income, having a card gives me the peace of mind of knowing that at least I'll be able to buy food if I get really desperate (though, I don't see that happening since I have a decent emergency fund). I would want to exhaust all other options first, but I know it's there just in case.

    I just can't believe the 180 that banks have made in the past 6 years. Blows my mind.

  11. Jake from Debt Sucks says:

    The Macy's part is pretty funny, since the same thing happened to me at Best Buy! I even bet the guy 5 bucks that I'd be denied, and he didn't believe me.

  12. Louise says:

    we lived for about 5 years with no debt except our house payment and no credit cards, it was great.

  13. Patti says:

    I am 30 and still have no credit. I unfortunately had no one advise me at 18 to get a credit card asap and I am living to regret it. I have had the same Macy's problem at Best Buy, and couldn't even get an account at Conn's to buy a $300 netbook computer! Even extremely low limit gas only gas cards at places like Shell are unobtainable. Its frustrating when emergencies arise (a $3500 transmission for example) and there is nothing you can do. I bought a new car this year as a co-signer with my parent (embarassing when you're 30!!) and I hope that staying on top of my payments there will at least give me a good jump start. It confuses me how credit agencies will give more chances to people who have already proven that they are not responsible with their money but will not give an inch to people like us who have proven that we have been financially responsible enough to handle all of our expenses without owing a dime. I wish you good luck in your credit building as I will be right along side you as I attempt to build mine.


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