Tips For New College Students When Establishing A Credit Card This Fall

It is crucial for college students to know that in order to launch themselves as a financially responsible individual, they must establish credit. With a limited budget they can still do this and starting when they are young will only help them in their future.

While opening a checking account will not report on a credit report, it will indicate that the individual can handle their finances independently. At this point in their life they will begin employment and will have an account in which to deposit their earned income.

College students are a prime target for various credit card companies, therefore vendors will often be on campus sites urging students to apply, often enticing them with a free gift. It can be difficult to turn down such a generous offer, so the student wants to first ask the representative some questions as offers can differ dramatically. The student wants to ask what their interest rate is. If it is a low introductory rate, ask how long it is for and when the rate ends. Also ask what the credit limit will start at (some limits may start as low as $100.). Obviously the individual with no credit history will not be approved for a very high limit, but be sure to ask. Ask if the card has an annual fee, if so what is the amount and does it automatically go on the card as a balance before the card is activated.

Another option to establish credit is to become a co-applicant on an account already established by someone (preferably a parent or other relative). If you do become a co-applicant this means that you are equally responsible for paying the bill by the due date. This account will also report to the credit bureaus, thus giving the first time credit card seeker a credit history. However it is critical that the bill is paid on time as late payments will not only report on your newly established credit report but the report of your guarantor (the person who enabled you to become a co-applicant). If you miss one payment, make sure it gets paid so the account becomes current and remains current. Aside from late payments reporting there are usually fees added to the account, bringing your balance due up more.

Once you have that credit card, keep balances low and do not obtain more credit than you need or can realistically handle. It may be tempting to open more accounts, particularly if a department store is offering a discount on the first purchase you make with their card, but you do not want to open too many accounts (many department store cards offer high interest rates which may start around 20%). Try to keep from charging more on your existing card until you have paid the balance off first.

Having good credit is of high importance in today’s world and it will remain with you throughout your life as it will make a difference in whether you get approved for a cell phone, apartment rental or mortgage, auto insurance and more.