Establishing a Credit History
May 30th 2007 12:55
In the last article I mentioned the need to establish a credit history of 2 years to be able to get a loan without a co-signer. This isn’t a terribly difficult thing to do; however, you’ll probably be 20 and already two years into your college career. But two years of lower interest rates is better than none.
The first thing you’ll need to do is open ONE credit card. I say one because college students are very likely to get into a lot of debt and this will help curb that if you only have one. I got my first credit card at 18 and it was one of the offers that came through the mail. I got lucky with that first one; it has an APR of 0% until I graduate from college. It only has a limit of $150, but I don’t use it anymore since I’ve opened others.
When you go to open a credit card, wait around for a good deal. I have many offers that want to charge 13.24% all the way up to 18% APR. I always wait for the ones that are 7.9% or 8.9% APR and start out with 0% APR for about 15-18 months. If they don’t come to your house, you can always check the internet for a good card.
Decide to use your card for a small, possibly recurring purchase that you can pay off every month. I use mine mostly to buy gas, so I have about $30-$50 to pay every month, and I know I can pay that off. Get into the habit of paying it off every month so that things don’t get out of hand.
After a few months or a year, if you are worried your spending might get out of control and want to just put it away and not use it, this is fine. If you want to do this, I would recommend a Capital One card. They report to the credit bureaus every single month (at least, that’s what they told me when I had one of their cards). This will keep your credit in great standing. Some credit card companies only report every two or three months.
I recommend opening an extra card if you know you are responsible enough to not create mounds of debt for yourself. Leave them in your room to avoid it!! I currently have three major credit cards and one store card. I only use one of the cards I have on a semi-regular basis.
By the time your junior year rolls around, you should be able to get a loan without a co-signer if you wish!
*If you are lucky, your parents can put your name on one of their cards when you are even younger and this will start your credit history as well. If you do happen to do this, be nice and don’t run up a bill for your parents, or they’ll probably take you off anyway!
The first thing you’ll need to do is open ONE credit card. I say one because college students are very likely to get into a lot of debt and this will help curb that if you only have one. I got my first credit card at 18 and it was one of the offers that came through the mail. I got lucky with that first one; it has an APR of 0% until I graduate from college. It only has a limit of $150, but I don’t use it anymore since I’ve opened others.
When you go to open a credit card, wait around for a good deal. I have many offers that want to charge 13.24% all the way up to 18% APR. I always wait for the ones that are 7.9% or 8.9% APR and start out with 0% APR for about 15-18 months. If they don’t come to your house, you can always check the internet for a good card.
Decide to use your card for a small, possibly recurring purchase that you can pay off every month. I use mine mostly to buy gas, so I have about $30-$50 to pay every month, and I know I can pay that off. Get into the habit of paying it off every month so that things don’t get out of hand.
After a few months or a year, if you are worried your spending might get out of control and want to just put it away and not use it, this is fine. If you want to do this, I would recommend a Capital One card. They report to the credit bureaus every single month (at least, that’s what they told me when I had one of their cards). This will keep your credit in great standing. Some credit card companies only report every two or three months.
I recommend opening an extra card if you know you are responsible enough to not create mounds of debt for yourself. Leave them in your room to avoid it!! I currently have three major credit cards and one store card. I only use one of the cards I have on a semi-regular basis.
By the time your junior year rolls around, you should be able to get a loan without a co-signer if you wish!
*If you are lucky, your parents can put your name on one of their cards when you are even younger and this will start your credit history as well. If you do happen to do this, be nice and don’t run up a bill for your parents, or they’ll probably take you off anyway!
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