If you’re headed off to college this fall you should not be anxious to get into debt, but you should be getting a credit card or two before February.
That’s when the new credit card regulations come into effect, and once they do, only those students with a job or a co-signer will have access to new credit cards.
Why should you care?
Because now is the time for you to begin building credit to use after graduation, and wise use of a credit card will help accomplish that goal.
If you’re just starting school, or already a student, do the research and find a card with the best rates and terms. Don’t just respond to any solicitation that might come in the mail. Instead, compare the offerings.
Look for a card with no annual fee and ask for a credit line that’s large enough to allow for occasional use of the card without exceeding 30% of available credit. Stay away from the “fee harvester” cards – those are the ones that charge an application fee, an annual fee, a fee for each use, a fee for non-use, a fee for paying the bill on line, and many others.
If that’s the only kind you can get, try instead to find the co-signer so you can be eligible for a better card.
As long as you’re doing research, look for a card that gives rewards for the purchases you’re likely to make. Some cards offer rewards for eating out while others reward you for renting movies, buying CD’s, or even buying your textbooks. If you’re going to be flying home for holidays, you might want to consider a travel rewards card.
Building your credit now by making small purchases and paying the balance in full each month will pay dividends after graduation. When your credit scores are high you’ll find it easier to get a loan for such necessities as a car, and you’ll have an easier time renting an apartment or home. Also, unless the rules change to prevent employers from checking credit, you’ll have an advantage when job hunting. You’ll even pay less for insurance.
Another way to begin building your credit score is to be added as a user on someone else’s credit card. That is, of course, if their credit is good and they pay that card on time, every time. This practice, called piggybacking, was disallowed for a time, but is once again in use.
You don’t have to actually carry or use the card – you only need to be named as a user. So if you have a relative with outstanding credit, ask them to add you to one of their credit card accounts.
Author:Marte Cliff
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