Credit building techniques, how to build credit today for a student
It is hard enough for those of us working to get a credit card these days, but if you are a student and unemployed, that can be nearly impossible. The credit building techniques I want to talk about here should be used by the students who are still in colleges and have no gainful employment to show to perspective creditors. It is very imperative to understand how to build credit today, giving yourselves an early advantage. Student credit cards used to be abundant to the point that many consumer advocates complained that banks were trying to get college kids hooked on easy credit. Today, however, the situation is different and the rules have evolved. While it is quite possible to get a student credit card for someone with absolutely no credit and no cosigner, you need to tread water carefully. The credit building techniques that should be used, must be carefully considered, and most importantly, carried through continuously after you start using a credit card to build solid foundation for future credit.
1. Apply for a student credit card. There are too many options available still, so choose carefully. If you denied, don't start frantically search for other lenders and submit new applications every day. Banks do not like to see too many frequent hard inquiries on establish credit reports, never mind on someone who has no credit at all. Wait at least 2 weeks after every application.
2. Once you get your first credit card, the initial credit limit will likely be around $500. Especially if you are a full time student with no steady income. Use this card carefully, on consistent basis, always pay in full each month / grace period and don't charge more than 40% of your credit limit for the first 8 months. Which would be $200 for a $500 limit. This is one of the most important techniques when it comes to building credit quickly.
3. Wait for at least 6 months after you get the first credit card before applying for another. Also do not bother to check your credit scores before 6 months, because it will take at least that for your credit score to appear, which will likely be at mid to high 600s.
4. Next on the list of credit building techniques is getting a second credit card. You can try for another student credit card from different issuer, but that may not work. Then go for a secured credit card. Here you must understand that such cards are not necessarily guaranteed. Do not go after the brand name secured credit cards, like the ones issued by Bank of America or Wells Fargo. Your best bet will likely be secured credit card to build credit from Orchard Bank or something like First Option Visa.
5. If you can't get another credit card, secured or student, ask your family members to add you as an authorised user on their credit cards. Also open an account in your local bank or credit union and see if they can offer you a card in return.
6. Macy's and Dick's stores, both have been great recently to a few kids with whose parents we are friends. The credit limits were very low, $200 to $250, but they do report with credit agencies. If you can a get a part time job in either store, it will be much easier to get one of their cards.
7. Finally, some obvious credit building techniques, like taking out a student loan is not quite good. You should only take a student loan if you need it to pay for your education. Having a student loan on credit report may not do much for the credit score and history, because it is almost universally deferred while you are in school.
8. The other rumor which may be very confusing is that charging your new student credit card to the limit and paying it off monthly and always on time, would prompt the issuer to raise your credit limit. While this often works with someone who has an established credit, please do not try it.
Sun Nov 14, 2010 10:11PM | Copyright: www.bad-credit-advisor.com | More in Credit Repair Tips | Comments (0)
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