Author Topic: Building credit  (Read 1636 times)

Murse

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Building credit
« on: November 23, 2014, 01:39:51 PM »
Ill keep this short and simple. I am a college student looking to graduate in June as an RN. Currently living with my parents, have a little bit of debt (1500 to the parents at 0%) and no job. I am looking to build credit and I want to know my options. Currently my expenses are gas and a 27$/month gym membership. I am very responsible with money and am a natural saver. Doing research it appears my only real option is a secured credit card, any other ideas?

Paul der Krake

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Re: Building credit
« Reply #1 on: November 23, 2014, 01:44:32 PM »
Yes. You don't want to have to build credit right before you need it. The earlier you start, the better.

Your bank may allow you to have an unsecured card with no annual fee if you already have a relationship with them, but this will vary from bank to bank.

Alternatively, if you don't want to give them an annual fee for the secured card, you can ask your parents to add you to one of their cards for a year or two until you establish enough history to get your own.

GizmoTX

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Re: Building credit
« Reply #2 on: November 23, 2014, 04:45:12 PM »
You don't want a secured card unless you absolutely have to; it's like a debit card. Never use a debit card to buy anything, especially online. Use a debit card to get cash, & never pay ATM fees.

First step: A checking account. You want zero fees, online access, a debit card, & real checks, preferably free. Most major banks offer "college checking" that does this. You need a way to easily pay your credit card & other expenses. Our son opened his checking account at 16, so I had to be on his account, but he was primary. You probably won't be required to have parents unless its the only way you get zero fees.

Second step: Find a zero fee unsecured Visa or Mastercard, preferably with cash back rewards; usually your bank is the best place to start. You don't need a big limit to start & you don't care about the finance charge, because you're going to pay your account in full every month. Go ahead & add a parent if that's the only way to get the card without going the secured card route, but make sure you are primary & not just an authorized user on your parents' card. Our son was able to get his first CC at age 17 with our checking account bank (Wells Fargo).

Use your new CC for your gas, gym, & other expenses like groceries even if it's for your parents & they reimburse you. To build credit, you have to borrow, spend, & promptly repay. Set a reminder on your phone calendar and text alerts from the CC bank so you won't miss a payment. Pay online from your checking account at least a day before it's due. Snail mail is too unpredictable.

After a year or so, you should find that you can add a second CC with better rewards & maybe an upfront bonus. Your first card can go to zero but don't close it right away, as it helps your utilization ratio & is a good backup. You should also be employed by this time, which will help.