18 yr old, student, wants credit, needs suggestions!

[M Aron]

Hi everyone!

I just turned 18, and am finishing my senior year in high school. I will be attending an university in the fall. I want to establish good credit as quickly as possible. Should I become an authorized user on my parents' account (they have great credit!), get a secured VISA card, or wait until I am in college to receive a student card? Or should I do a combination or all three? What would be the best plan to create and build a great credit score?

Thank you for all advice and suggestions.

Mathew

[Tourniquet416]

the first week you enter college, a lot of recruiters will be there to sign you up for credit cards, and they'll tell you to put how much you pay for tuition as your income. and you will get a card, but PLEASE be responsible and keep all your cards under 30%. i wouldn't get more than 2 major cards and 2 stores cards.

10 years later and i'm still trying to get my credit clear from what i did in college. can't rent an apartment, buy a house and have been turned down for jobs because of my credit. so don't be like me and others. be responsible and pay your bills on time EVERY month. good luck.

[DHK]

Being an AU on your parent's accounts won't help you establish YOUR OWN credit. You will be "borrowing" your parent's credit.

I do agree in doing this ONLY to build credit. It can also be good for real emergencies (if your own card is maxed - don't do that).

You really want to establish and get your own credit. I recommend getting a college card through your bank. Much easier to maintain the account that way.

Use the card only for books & stuff and make sure that you always PIF.

Also, I don't recommend having any kind of rewards program on a college or any credit that you are using to build your credit. You don't need any more "reasons" to use credit cards unnecessarily.

[DocDon]

Also keep in mind that the only reason CC companies want to give you a student card is to lure you into their trap earlier...

Check out National City's program and see if it fits your needs:

http://www.nationalcity.com/Personal/Cards/PrepaidCards/Buxx.asp

[Thomas1096]

I know it's been said, BUT you can't hear it enough...

DO NOT FALL FOR THE TRAP.

When I married the love of my life, I found out that she had 18 credit cards. She didn't have high balances, but small balances on many cards equal a large amount.

All you need is one credit card IMO while in school and it needs to be used for emergencies, not beer or parties or smokes or snacks.... Pay it off every month. Bt the time you are out, you'll have more than enough credit.

[M Aron]

Thank you for your quick responses and worthy advice. I have one more question:

Does anyone know anything about the Wells Fargo Secured Visa Card?

I know there is a $19 annual charge, and the limit is equal to the deposit. Will paying my bills, on time with the card, report good credit to the CRA's?

Thank you.

Mathew

[wolfpup]

if you can go to a credit union, do that. they offer secured visas that are equal to the deposit with no annual fee. Their interest rate is usually lower and they usually pay a higher interest on your savings amount.

[jlouki01]

Dont 'get into a trap. Get a card with a low limit.. stay under 700-1000. That is a good amount that is easy to pay off. Don't use it for food, get a Check card for daily stuff. Put a little on the CC and pay it off every month. Pick a card that you can pay on the web from your checking account.

if they raise your limit call and have it reduced Don't get swallowed into that trap. You want to be able to get thru college and get a house without paying off Pizza's for the next 10 years.

[M Aron]

In the last month...

I went to a credit union with $600 to get a secured credit card. The loan officer suggested I get a Start Smart Visa for people with no credit. I said great, and I filled out an application, opened an account, paid a $5 opening deposit, sent in a pay stub, and got approved for a $750 credit limit, unsecured.

I got a piece of mail from 1st Financial Bank, and it said to apply for a student card. I applied and got approved for a $250 unsecured credit card.

I now have two unsecured VISA credit cards with a total credit limit of $1000. I have used them for books and food, and will not buy too many items. I think I am financially responsible and will keep my credit in good standing. I am just excited to have started building my credit. Thanks for the advice.

Mat

[score booster]

That's great news M ARON...just goes to show credit unions have a reputation of coming through time and again! Just make sure they report to the CRA's-some don't. You sound very responsible and concerned about your future credit. You'll do fine. I wish I had your insight when I was your age!

[Bjoeboo]

I know its an old post. and the original poster is probably long ago moved along to other things. But just in case anyone else in a similar predicament comes along. I wanted to add that one of the factors used in determining your score is credit history. I've read here that 30 years history gives you the maximum points available for that section of your FICO or whatever scoring model used. So my point is once these secured cards turn unsecured keep them. Don't close them. These cards can someday reflect 30 yr old tradelines (TL). Wow. Makes me want to send a PFD letter for a 15 yr old auto loan CO.

BTW good stuff stays on your credit report (CR) indefinitely. **Edit - I just found out inactive good stuff i.e. paid off loan. falls off after 10 yrs.**

Bad stuff (chargeoffs (CO)) come off your report after 7 yrs. Yet another reason not to let your oldest TLs become derogatory.

[GreatGadsby]

Makes me want to send a PFD letter for a 15 yr old auto loan CO.

why? it should have been off your report 8 years ago.

[Bjoeboo]

why? it should have been off your report 8 years ago.

Exactly.

Since its gone I now only have 9 years credit history out of a total FICO possible history of 30 years; instead of 15 I could have if I successfully PFD'd the OC to notate 'Paid' or 'Paid As Agreed' status where the CO used to be before SOL.

*sigh* maybe I hit lotto and offer PFD to GMAC.

Trust me I have enuff derogs STILL within SOL to even consider something like that.

[Bjoeboo]

DHK wrote:

Being an AU on your parent's accounts won't help you establish YOUR OWN credit. You will be "borrowing" your parent's credit.

I do agree in doing this ONLY to build credit. It can also be good for real emergencies (if your own card is maxed - don't do that).

Do you work for a CC company or something "borrowing credit"??

What does that mean? Isn't ALL credit borrowing??

If I'm wrong about this I'll expect to be pounced on and slung about mercilously by the vets but here we go:

Fact: When someone puts you on their CC as an AU your report reflects the new TL with the CL and balance. (thats the "borrowing" part we agree so far)

Fact: the new TL itself will improve your score (after it ages a bit) and so does a high CL (it indicates someone trusts you to extend you credit..Doesn't matter if its friend/relative whatever)

Fact: Lenders use your score and CL to base decisions to extend you their own creditline. i.e. many CC companys simply match your highest CL when issuing you a card. Also other/more TLs reflect history, without which you're more likely to be declined or given a higher APR rate, or lower CL. It doesn't matter if your establishing credit, rebuilding credit or already have decent credit but want to join the 700club, or even the 800..

I'm not sure you're "borrowing" credit when it becomes a a part of your own CR that lenders decide upon and the results of those decisions (new TLs higher CLs) you keep even after your removed as an AU. To me the whole "borrowing credit argument sounds like Cap1 propaganda. They'd prefer the world over had a 630 FICO so they could reap the rewards. High interest. Made up fees..

They'd decline all persons with a score over 800 if it was legal.

(They make no $$ off them as they pay their balance before they receive their statement)