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June 25, 2010 / Suzie

Suzie Solves the College Credit Crisis: How to Get Credit as a Student

So I know that “college student” and anything that has to do with “credit” don’t go very well together. Our generation has hundreds of thousands of dollars of credit card debt, and we haven’t been known to be particularly responsible in overcoming our shortfalls. However, building credit is important. If you want a car or a house after college, you better start thinking about building your credit now. I believe that college students are responsible enough to have credit cards, but sometimes they cannot obtain them. Why? They don’t have credit! So how do you get credit without any credit history? I’ll tell you what I did. Read on.

Don’t overdraw your bank account
If you have one. If you don’t, walk, no, run to your closest bank and open a checking and savings account. Having a bank account shows credit card companies that you have stability. Once you have an account, note that you cannot overdraw. Not only does it cost you pricey fees, it negatively affects your credit.

Pay your cell phone and insurance bill
A lot of us have been on our family phone plans since we were 14 and insurance since we were 16. It’s time to break off and start paying your own bill (and on time!). Can’t afford it? Ask your folks to send you a check to pay the company yourself. Why? It builds a foundation for credit without having a card.

Pay your rent and utilities
If you’re living off-campus, paying for rent and utilities in full, and on time, you are also contributing to a positive credit report.

If you already have some money, borrow from yourself!

  • Step 1: Get a High-Yield CD for a set amount of time, say 6 months to a year.
  • Step 2: Take out a secured loan against the CD for the same amount of time.
  • Step 3: Put the loan money in a high-yield checking account.
  • Step 4: Use step 3’s checking account (funded by the loan) to pay off the loan.
  • Note: You will likely spend more on the loan interest than what you earn in your CD. However, this is a fast track to earning credit.

Consider a joint account
There’s nothing wrong with piggybacking on someone’s good credit to establish credit of your own, as long as you don’t ruin his or her credit. According to the Credit CARD Act of 2009, if you are under 21, you will need a co-signer or proof of income to get a credit card anyway. Though the methods listed will help you build your credit, owning a card is the best way to establish it yourself.

Know your credit score and credit report
FreeCreditReport offers one free credit check a year, and CreditKarma will estimate your credit score for free (it’s dead-on for me). This won’t take more than five minutes of your time but could save you thousands. In knowing your credit score and what is on your report, you can gauge when you are ready for a credit card and whether or not your report is accurate.


One Comment

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  1. dj de nunta / Apr 25 2013 3:31 am

    Remarkable issues here. I am very happy to look your post.
    Thank you a lot and I’m taking a look ahead to touch you. Will you kindly drop me a e-mail?

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