Graduating college with a degree and no credit history can put you behind the financial eight ball. Just when you're ready to start adult life on your own, a nonexistent credit history can make everyday purchases and services more expensive. It can also affect where you live and your ability to qualify for a car loan. Without a proven track record of responsible credit use, businesses and lenders are likely to charge more for the same services offered to your creditworthy peers.
A credit card, used responsibly, is one of the best financial tools available to build a strong credit profile.
Here's how to get your first credit card while still in college.
Apply for a Secured Credit Card
Advantages of using a secured card include:
- Fraud and purchase protections similar to regular credit cards
- Card activity that's reported to the major credit reporting bureaus
- No risk of overspending due to secured limit
Disadvantages of using a secured card include:
- Minimum deposit requirements
- Borrowing limits that may be less than the amount deposited into the account
Hanscom FCU Tip: Even if your debit card has a Visa® or Mastercard® logo, it cannot help you build credit. When you select "credit" at checkout, the money is still withdrawn directly from your checking account. There are no monthly payments on a debit card that get reported to a credit reporting bureau.
Become a Joint Owner or Authorized User
- If the relationship goes sour, it's tough to remove yourself from a joint ownership credit card. Authorized users can easily be removed by making a phone call to the credit card issuer.
- Joint ownership card activity is automatically reported to the credit reporting bureaus. If you're an authorized user on a credit card, you'll want to check to make sure activity gets added to your credit history report.