Many people commit the unfortunate mistake to wait too long to start building their credit score. In fact, now days most people wait until they have graduated from college (if attended), get a job, do a thing here and there and then finally decide to apply for a credit card–only to find out that eleven times out of ten they will be rejected.
Well, be glad that you’re at What Isaac Said. Today, I will teach you a quick and easy strategy to build your credit as a college student. But first you must ask yourself, why is it important to build my credit?
Here are a few reasons why building your credit is important:
- A good credit is imperative to secure a good financing when purchasing a new home or car.
- You will need a good credit to facilitate the process to having basic utilities connected to your home (energy contract, water supply, etc.).
- If you ever need a loan, a good credit will always be in your favor in terms of interest rates.
- Some companies or employers might check your credit rating just to get a better prospective on their future employee.
Therefore, establishing a reputable credit history at an early age will definitely open more doors for you. How do you start building your credit without having a credit history? Easy!
As a college student myself, this is perhaps the number one reason why my peers don’t even think about building their credit score. People typically just don’t know how. No one at school teaches you how to do it. No one ever tells you how to get a credit card and build your credit. Worry no more! Today I will explain to you how to do it the right way.
How do you start? First, you will need to apply to either a low score credit card that most of the time approves its applicants or to a student credit card. Keep in mind that there are many other ways to go about this but I will show you what typically works so that you at least have a basic guide on how to get started.
Here are some student credit cards that you can apply to and be approved for immediately:
- Fair. No annual fee. No over limit fee. No foreign transaction fee. No late fee on your first late payment. And paying late won’t increase your APR.
- Generous. 5% cash back at Home Improvement Stores, Furniture Stores and Bed Bath & Beyond® on up to $1,500 in purchases from April through June 2014 when you sign up. And 1% cash back on all other purchases.
- Human. Talk to a real person any time with 100% U.S.-based service.
- No annual fee.
- Earn points with purchases and redeem points for gifts and other discounts on their website. See their website for more details.
- No annual fee.
- Fixed payment due date so you’ll always know when your payment is due.
- Through responsible use, it will help build your credit with reporting to all three major credit bureaus.
If these credit cards don’t appeal to you, keep calm and keep reading because I got a good one for you! The following is a secured credit card. This means that you will have to place a required deposit which will also serve as your credit balance. You can think of this type of card in terms of a loan. This type of card is just as if you were to give yourself a loan which you will have to pay it off to yourself after some time. After you pay it off or build sufficient credit history, you will be able to apply for an actual credit card that does not require this type of initial deposit. On the bright side, the secure credit cards typically get approved as long as you make a deposit to set your balance. This type of cards is often times utilized as a stepping stone in the world of credit. With this type of credit card, you are simply showing the bank that you are responsible enough to handle a credit card. I mean, the deposit that you make becomes your credit limit (sort of) so it will be your money that you’ll be spending and paying back after all, not the bank’s money!
- Annual fee $29
- You provide an upfront deposit raging from $300-$5,000 and that sets your credit limit, subject to their credit approval.
- As soon as 15 months after opening your account, you could be eligible to apply for an unsecured card from First National Bank — and get your deposit back!
I personally would primarily recommend you to go with option 1,2, or 3. Leave option 4 as your last resort. Additionally, you may also go to your local bank and ask for the type of credit cards that they have available for college students or for someone that is about to start building their credit.
Furthermore, a great and free website that can help you chose your next credit card, track your credit score, and much more is www.CreditKarma.com. This is a great tool to add under your belt as you build your credit card history. Good luck as you seek the credit card that fits your wallet the best!
One last tip from What Isaac Said: use your credit card to make smart purchases, but NEVER go over your credit card limit and always pay on time. In other words, don’t spend more money than what you currently have!