Establishing credit with no credit history
Unemployed college-aged students under age 21 will have a harder time getting credit cards than those who passed through campus before them. Back then, you could get a credit card with no job or any other source of income, and all you had to do was sign up for a free pizza or a T-shirt.
While new regulations may help students avoid coming out of school with thousands of dollars in credit card debt, it won’t help them establish a credit history. Building credit is important. As a result, students may find themselves asking, “What now?”
Adam Jesko, founder of IndexCreditCards.com, wrote a guest blog for Get Rich Slowly in which he provided help for those grappling with that same question. Among the tips is applying for a secured credit card.
“A secured credit card works like a standard credit card, but with a slight catch — you have to deposit money into an account as collateral before you use the card. The amount you deposit becomes equal to the size of your credit line. For example, if you deposit $500 into your account, you can charge up to $500 with the card. You then pay your balance each month, exactly like you would with a regular credit card,” he wrote.
How did you build your credit before it was as easily accessible as it has been for young people? What advice would you give to a young person trying to establish a credit history?
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6 comments Add your comment
Erin
November 11th, 2009
3:44 pm
My parents put me on their card as an “authorized user” for a time. It actually bumped my credit score up a lot. Of course that’s not an option for everyone.
Opening a student checking account with a debit/credit card is also a start. Many are still easily available to students and often have Visa cards tied to them, which help.
They might also check out Costco (an American Express card is tied to membership) or similar easier to get specific cards.
Also, making prompt payments on their school loans whenever applicable will also help a ton.
J
November 11th, 2009
6:49 pm
Visa Debit cards do not effect your credit in any way. Also being an authorized user will not do much if anything for your credt. You ultimately have no reponsibility to make a payment. While it may bump up your score a bank does not look at it as positive credit.
Wesley
November 11th, 2009
7:38 pm
I have really bad credit from my student loan issues I had two years ago. Now I find myself unable to even get started back building my credit.
I brought this upon myself not handling my student loans even when I was laid off but there has to be a way to bring my score up right?
If anyone knows how I can do this please help me.
Rasheeed Willis
November 11th, 2009
9:11 pm
I have no credit. My baby mamma ruined it. Damn Comcast made me pay a 400 deposit to get my cable turned on in my new crib, that aint fair.
Erin
November 12th, 2009
1:02 pm
@J- you’d think that, but that’s all that’s on my credit history (new job, graduated recently) and I did pull my credit reports for the 3 major agencies – the accounts are there, and while applying for a mortgage this month they indicated I had a a 790 on what they pulled, and the rates all came in nicely. I have not actually had a credit card of my own yet – I didn’t want to do anything while applying for the mortgage, and will feel okay setting up the accounts I need from here.
Jim
November 15th, 2009
11:15 pm
I filed chap. 7 bankruptcy in 2006, I imediatly started getting new credit card offers. Two years later I got a 200K mortgage. and credit still flows freely, except, I’m more careful now.