Just as much as earning your diploma, getting your first credit card the card your parents gave you doesn't count. It's tied to your parent's credit history; this new card is how you will establish your own credit.
When you made your payments on time for that card, you were helping your parent's credit rating rather than your own. Now that you have a card of your own, now you can begin building a credit history.
Whether you're still in school or have already graduated, a lot of the things you'll finding yourself needing to do; for instance, rent an apartment or buy a car will be affected by your credit rating. As a student, you may not have yet had an opportunity to establish a credit history.
Having no credit history can be worse than having bad credit. In the financial world, you are an unknown level of risk - there's at least a 55% chance you'll default.
Thus lenders will be reluctant to offer you a line if credit. Banks don't want to lose money, obviously. But how are you to establish yourself as credit worthy if no one will extend you credit?
Unfortunately, this is how credit works. The easiest way to establish a credit history is to use a credit card. You shouldn't get overeager and just go for the first offer you see though.
You can compare the APR as well as the terms and conditions offered by many different credit card companies online. Always read the fine print carefully. There are even websites which give you charts of different credit cards, making this comparison much easier.
Whenever you receive a credit card offer, look at it carefully. You might be able to find one which offers a low APR and no annual fee. There are also cards which are easy to qualify for, but start you with a small credit limit - these are great for beginning to establish a credit history.
If you don't need to make any big purchases, these cards are perfect. You can even be instantly approved in many cases.
You won't have to wait to long for your card to arrive. All you need to do now is use it and be sure to pay your balance in time. Pay off your entire balance if possible - charge no more than you know you'll be able to pay when the bill comes.
After a couple of months doing this, you will have started to establish a good credit history. This can be very important in the future.
Many employers use credit rating as a factor when deciding on a new hire. People with good credit tend to be reliable, so employers will consider your credit. While having a credit card won't land you that job you wanted by itself, it can help you to buy a new suit for the interview.
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Frequently Asked Questions
Is a reverse mortgage a good idea
By: mimi | 13-11-2008
is a reverse mortgage a good idea
I have asked one of my credit card companies if ...
By: Marie Fort | 13-11-2008
I have asked one of my credit card companies if they can lower my interest rate since I have been on time with payments for the last six months and I have been told since the card is closed they cannot do this. Am I stuck paying the highest interest rate, I am going nowhere with my payments since I can only afford the miniumum payment each month.. I would like to start paying down the principal if possible. Is this legal? Awaiting your reply.
Mailing list opt outs
By: Ingrid | 13-11-2008
What website can I go to in order to opt out of credit card mailing lists?
How do I find that out?
By: Nick | 13-11-2008
I missed getting a nice designer bag as a gift for reward points through my credit card by just five points. I somehow feel that my card issuer gives lesser reward points compared to those that my friends have? How do I find that out?
I'm having a problem with my late husbands credit cards
By: confused | 13-11-2008
My husband had credit cards in his name alone. He passed away in April. the credit card people are still calling me 7 months later, they say it was charged off, but I think they still want me to pay. there was no will and the only thing in his name alone was a 99 Mazda. What should I do ? What does this mean ?
What is the credit card with the lowest apr for 3 ...
By: magaudreau | 12-11-2008
what is the credit card with the lowest apr for 3 years
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