Credit Cards for Students
Graduating college or high school is a joyous occasion and reason to celebrate. You now may have more freedom than ever and have the opportunity to build your own life. But it also means you have added responsibilities. And a lot of those come from how to handle your personal finances on your own. From budgeting to credit scores, there’s a lot to learn and manage to ensure you stay in a good position to handle your money with greater peace of mind. If you’re a new or graduating student from college or high school, you might be looking for ways to build credit, often from scratch. This guide takes you through how credit cards for students can help you start building your credit history right.
How Can I Build Credit with a Credit Card?
Credit scores are built up of different factors, one of which is the age of your credit accounts. Since you likely don’t have established credit, it’s crucial to start building up the credit age of your accounts to establish creditworthiness over time. Responsible use of your credit card can help build your credit as it shows you’re capable of handling a credit line. One thing you can do is use the credit card for a recurring monthly payment, and pay back the full amount each month. This series of payments can help you establish a healthy payment history, a critical factor for your credit scores.
If you’re using your credit card for regular expenses, it’s important to keep your credit utilization ratio low. This is especially true if you’re first starting to build credit and you have a low credit limit. While you can use your credit card as you wish, running up your credit limit will end up hurting your scores. So, use your new card wisely.
How Can I Find the Best Credit Cards for Students?
For students, a secured credit card is a good option if you want to build credit with little to no credit history. These cards are often geared towards helping consumers build credit when they have poor credit. While the credit limit may seem low, that’s beside the point. Use this card strategically by making purchases and paying it back on time. When looking for credit cards, it’s crucial to do your research and find out if the card’s terms agree with your finances. If you find yourself unable to afford annual fees or make minimum payments on a certain card, it might be best to look for other options. Choose carefully, because even though you’re trying to build credit, you need to make sure your budget has room to manage a credit card.
Look for terms such as annual fees, APR, as well as credit limits. Secured credit cards are a good option for those looking for credit cards for students with no credit. These cards require collateral, which means that the amount you deposit, often as little as $200, becomes your credit limit. And some may not require a credit check. For cards geared for students, if you are under a certain age and don’t meet certain income thresholds, you may require a cosigner. These cards often offer rewards on education-related purchases.
Other Options to Help You Build Credit
While getting a credit card is a good way to build credit over time, there are other options to build a strong credit profile. Here are some other credit building ventures you can pursue.
Become an Authorized User
This essentially means that you can get added to another’s credit card account as someone who can use the card. If a responsible friend or family member adds you to their card, and makes payments on time, this can help build your credit. You don’t even need to use the card yourself, and it’ll show up on your credit reports, helping you establish a good payment history.
Get a Credit Builder Loan
These installment loans are designed to do just that, build credit. Credit builder loans work by placing the funds you qualify for in a savings account or certificate of deposit. Once you’ve paid off the balance, the funds are given back to you. As long as you make payments on time, you can help build your credit, and get access to the money which you can use on educational expenses. Plus, a loan is a different kind of account, which means having one on your credit makes for a healthier credit mix, a factor in your scores.
Find a Credit Card Today!
A good credit score opens up many doors to financial stability. From a new car, house, or even better credit card offers, building your credit history early on yields great benefits. And it all starts with you. Credit.com has the resources you need to find good credit cards for students or for other parts of your life journey. So, you can kickstart your credit building journey right. Check out all the credit cards we offer here to find what works best for you!
