Starting Your Credit History as a Student

Uncategorized

If you’re a student, let’s face it: Your credit history is probably limited or maybe even non-existent. However, you’re going to need to increase your credit as you get older, to make those big purchases that come with becoming an adult. Here are some tips on how to get started:

1) Open a checking account and / or savings account. While this won’t be reported to Equifax, Experian or Transunion, many lenders will ask about bank accounts before extending any first-time credit.

2) Consider signing up with a utility or two in your name. This might be useful in the future when you go to borrow for the first time.

3) Make a department-store card your first credit card. If you’ve ever been shopping at the mall, you’ve noticed that almost every store offers some sort of in-house credit card. If you’re like most people, you’ve looked at them with annoyance and turned down the offers. To be sure, for most of your life, turning down these offers is a good thing. After all, while the promotion might seem enticing, usually they have very high interest rates. So yes, definitely, as you get older, make it a practice of declining the store-card offers.

However for right now, just starting to build a credit history, it’s a good idea to apply for (and get approved for) just one store credit card. These cards typically have a high approval rate, even for people (such as you) with a limited credit history. Be careful though: Not all of these report to the credit bureaus. If they don’t, don’t waste your time. The whole point here is for them to tell the good folks at Experian, et. al., about how good you are at paying your debts on time.

4) Finally, if all else fails, consider getting a secured credit card. There are dozens of these available, and are easily found by a GOOGLE search. A secured card works just like any other card. You can use it to buy clothing, food, gasoline, or anything else that a traditional card does. They look the same, too. Nobody will ever notice that it’s a secured card. What’s different is that these people will approve everyone, because you pay your initial credit-limit upfront. For instance, pay $500 upfront, and get $500 to spend on the card. In return, the card-owner will report your payment history to the bureaus, and if you pay on time, your credit score will increase.

CAUTION: Do NOT mistake these cards for those pre-paid cards found at drugstores and convenience stores. While these operate in much the same way, they charge monthly fees to use them, fees to refill them, and worst of all, they do not report your payment history to the bureaus.

Learn more and compare credit cards when YOU are ready at www.studentcreditcards.com

Student credit cards.com @ March 3, 2008