Student entering first year of college, should I get a credit card?

[quadomatic]

So, I tried applying for an Ally Bank savings account and an HSBC savings account. Ally denied me because of my credit score (which I don't know) and HSBC just denied me, but didn't really say why.

I'm guessing it's because of my lack of credit history. It's probably a good idea then that I start to establish my credit history. I plan on going to medical school in a few years and I hear that having a good credit score is essential to getting the loans needed to pay for med school.

I'm starting my first year of college in about a week. I've had a part time job for about a year now, and I plan on finding a part time job during the school year, and working during the summers (my current employer is letting me take an extended leave and work during summers).

Provided I do find a part-time job for the school year, would it be a good idea to get a credit card so I can start establishing my credit score? And, if I do get a credit card, would it be appropriate to use it for expenses I would normally use my check card for?

Thanks

[janie_super@yahoo.com]

YES get a credit card as soon as possible when you are young. make sure its a NO FEE card. pay it off each month if you use it. you may have to use it occasionally to keep it active. keep the credit card open as long as you can, perhaps for the rest of your life.

your credit score will be helped by the age of this card. i opened 3 cards in college. one i recently closed because they tried to boost my interest rate so i opted out. the other two are still open and are boosting my otherwise poor credit score.

[eric1985]

To echo Janie, yes, get a credit card. Start building credit early. However, don't be enticed by the offers you get around campus. They are designed to screw you in the long run.

Just don't spend more than you earn and pay it off in full every single month to avoid interest. I write about credit regularly on my blog, Narrow Bridge, linked in my signature. It is a blog for college students and 20somethings to get a good grip on their finances.

[answerer]

First of all, good job on thinking ahead. I have friends who graduated from college without ever having a credit card, landed a 80k/yr job and got turned down for a small auto loan.

Ally and HSBC might have denied you because they use information in your credit history to verify your identity and you don't have a credit history.

You might have some difficulty obtaining a credit card with the new laws coming into effect tomorrow. You will need to show sufficient income or ask your parents to co-sign. Ask your current bank for a card. Otherwise, a school/student credit union might be easier.

A few things to remember:
-Don't spend more than you can pay off each month
-Set up autopay
-Put a reminder in your calendar of the due date

[Beau]

You do not need a credit score, or a credit card.

You only need a credit score if you plan on going into debt! You do not need to borrow money for a car, appliance, TV, or anything else! Save cash and buy it when you actually have the money! Don't purchase things that you can't pay for!

And before you say "well what about a mortgage?", you do not need a credit score to buy a house. Find a bank that will do manual underwriting.

That's my thoughts on this. I hope I wasn't unclear. :)

[eric1985]

Having worked in banking (and still in finance) I have to completely disagree with Beau. You need a credit score for a normal, productive life unless you plan on renting forever.

You may be able to find a mortgage without a previous score, but you will be hardpressed. A credit card, managed responsibly, is vital to establishing credit while young and in college.

[jennifer888]

Try to build up your credit as early as possible if you know you will be needing it soon!

If you have trouble qualifying for a card you can have someone, like a parent, co-sign with you. This is a good option for a first-time credit card user because not only are they accountable to the credit card company, but the co-signer as well.

Another option is to apply for a card at a department store. These revolving accounts are usually easier to qualify for and they start you off with a low limit, like $500. The good thing about these cards, when you are trying to build credit, is that you can pay them off the same day you make the purchase! So if you adverse to owing money and want to gain that credit, this could be a good option for you.

[benzaiten]

So, I tried applying for an Ally Bank savings account and an HSBC savings account. Ally denied me because of my credit score (which I don't know) and HSBC just denied me, but didn't really say why.

I'm guessing it's because of my lack of credit history. It's probably a good idea then that I start to establish my credit history. I plan on going to medical school in a few years and I hear that having a good credit score is essential to getting the loans needed to pay for med school.

I'm starting my first year of college in about a week. I've had a part time job for about a year now, and I plan on finding a part time job during the school year, and working during the summers (my current employer is letting me take an extended leave and work during summers).

Provided I do find a part-time job for the school year, would it be a good idea to get a credit card so I can start establishing my credit score? And, if I do get a credit card, would it be appropriate to use it for expenses I would normally use my check card for?

Thanks

Congratulations on entering college! :) It is good you are working part time, hopefully you are saving at least 20% of your paychecks. If you can direct deposit it, reduces temptation and makes things easier. About obtaining a credit card it depends on your situation. I'd advise getting a checking account and savings account first. Get free checking and link it to an online savings account like at HSBC or EmigrantDirect. There are others so just shop around for convenience most are FDIC insured which does not equal government insured.

The reason for obtaining a check first is develop discipline and budgeting skills. Once you get use to this and TRACKING where your money/income goes you are gradually ready for a credit card. Prior to this getting a credit card is for many too great a temptation. The average college student has over $10k in credit card debt. So waiting a year while you build up your good financial habits/discipline is well worthwhile, right? :)

Typically the reason why you get denied for a credit card is income and your credit history/score. You are starting out now so your income is low, likewise with your credit history. Building all of these takes time, try to be patient.

Eventually after you get your credit card yes you can use it to charge your needed expenses like books. This is a good benefit of wisely using a credit card. Keep your check card just make sure to know how much you spend on needed items vs luxery items like eating out and entertainment.

Good luck!

[hadengrant]

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[OC CPA]

Yes I would. You never know when you will need some additional cash for emergency or just having fun. I don't recommend debt, but college is supposed to be fun and if you work hard you will be able to pay it off once you graduate. Plus, building credit is a good thing.

[jacks013]

This is all fine and dandy in a perfect world...the only people I know to make this work is the Duggars (TLC). you NEED a credit score. I appoed for a capitol one card first year of college. It was great. i started wit ha $500 limit, which was good they only gave me that much. Their rates have stayed good all this time, and i am still with them. It helped. You will need credit report for all kinds of things. having a student loan helps with the credit too, but you will need new cars, houses, tv's etc in life. the cell phone companies even used to run a credit check. CERTAILY start now!
and good luck!

You do not need a credit score, or a credit card.

You only need a credit score if you plan on going into debt! You do not need to borrow money for a car, appliance, TV, or anything else! Save cash and buy it when you actually have the money! Don't purchase things that you can't pay for!

And before you say "well what about a mortgage?", you do not need a credit score to buy a house. Find a bank that will do manual underwriting.

That's my thoughts on this. I hope I wasn't unclear. :)

[janie_super@yahoo.com]

jacks.. The father Dugger makes his money in real estate I believe? I can pretty much bet he has a credit history to do anything. Perhaps his personal situation is debt free, but i've never heard him say he was credit score free.

[Jefffou]

I disagree with most of the posters here.

I vehemently disagree with any student opening up a 21.2% line of credit.

I know (and have dealt professionally with) so many people who acquired debt early and it burdened them for many years. What seemed "fun" at first ended up anything but. Like Beau said, you only need a credit score if you want to go into debt.

Learn about saving, investing (http://www.401kfundadvice.com/articles/howdomutualfundswork.html) and spending.

I believe that you knew the right answer (and the wrong answer) or you wouldn't have even posted here.

Jeff

[janie_super@yahoo.com]

I disagree with most of the posters here.

I vehemently disagree with any student opening up a 21.2% line of credit.

I know (and have dealt professionally with) so many people who acquired debt early and it burdened them for many years. What seemed "fun" at first ended up anything but. Like Beau said, you only need a credit score if you want to go into debt.

Learn about saving, investing (http://www.401kfundadvice.com/articles/howdomutualfundswork.html) and spending.

I believe that you knew the right answer (and the wrong answer) or you wouldn't have even posted here.

Jeff

in a perfect world we can all save up all the money we need to buy a car and a house, but.... most of us dont have the money or TIME to do that. if this student wants to make these purchases before they turn 40, they are going to need a good credit history to get the lowest interest rates possible, else its apartment living and taking the bus, and is that really living?

youve got to spend something to get something

[BenedictBaldwin]

I don't see anything wrong if you get your own credit card now. Only make sure that you'll be responsible enough to handle all your credit card transactions. Don't exceed your capacity to pay your credit card balance. That might be a big problem in the long run.

[Beau]

in a perfect world we can all save up all the money we need to buy a car and a house, but.... most of us dont have the money or TIME to do that. if this student wants to make these purchases before they turn 40, they are going to need a good credit history to get the lowest interest rates possible.

Let me preface by saying that I'm against all debt. However, there is one expense where you're right, it's not always reasonable to save up and pay cash, and that's with a home mortgage. However, it's crucial that you be smart. Get a 15 year fixed rate mortgage where the payment is no more than a 4th of your income (after taxes) and your house will become a blessing, not a burden.

With all other forms of debt, if you can't afford to purchase the item outright, you shouldn't buy it. You may think you can afford the payment, but what happens when life comes along and screws up your plan? You're adding risk to your life by owing someone else money.

I see way too many people wondering through life with ridiculous car payments, boat payments etc. You should not go into debt for toys. Yes, cars become toys when you go deeply into debt to have them! Until you can afford something nice, you should buy used cars. You can buy a really nice used car for under $5,000.

else its apartment living and taking the bus, and is that really living?

I think we have different definitions of "living", if your only goal in life is to keep up with all your friends and "live large" then by all means, go deep into debt and have fun!

My idea of fun (and living) is to have the freedom that I get from not having debt and not sending out every penny of my income to creditors. That to me is a horribly un-fulfilling lifestyle.

[optwizard]

It is easy for the college student to get caught in the credit card trap. Approximately 83% of college students have credit cards. Creditors set up booths on college campuses to lure students in to fill out applications in exchange for a T-shirt or some other gimmick. Creditors know two important things: a college student usually keeps their first credit card for approximately 15 years, and parents will often pay if the student falls behind. While banks and retailers look to college students for new business, it is also the perfect time to begin establishing good financial health. One-fifth of graduate students in 2000 had credit card debt ranging from $6,000-$15,000. Here are some guidelines to follow.
Talk with your parents. Ask your parents their experience using credit in order to prepare for becoming a good credit consumer.
Start with a secured card. With a secured card, you deposit money into the account and then you can charge only up to that limit. Once you’ve shown you are responsible with a secured card, you can move onto a regular card.
Compare credit cards. Shop around for the best terms with www.BankRate.com or www.CardWeb.com. Picking the right card can save you money.
Pay your balance in full at the end of the month. This is a good way to establish and build credit. It also shows creditors that you aren’t spending beyond your means and can handle repayment obligations.
Always pay on time. A single slip up will place a black mark on your credit report for up to 7 years. In addition your creditor may increase your interest rates as well as charge you a $35.00 late fee.
Avoid making only the minimum payments. Just paying the minimum is a trap. If you pay off a $1,000 debt on an 18% interest card, by just sending the minimum payment each month it will take you 12 years to repay.
Create a budget. Identify income such as financial aid, money from parents, part-time job etc. Then list expenses such as books, meals, clothing, and entertainment. This way you can identify how much you can afford to spend.
Don’t collect a drawer full of credit cards. Get one card with a low limit and use it responsibly before you even consider getting another one.
For a completely confidential debt consolidation and budget analysis, call A New Horizon today! Let our Certified Credit Counselors help you get a handle on your budget and pave the way for a strong and secure financial future. CALL TODAY - 1-800-556-1548

[kittelsoncarpo]

You don't need credit card. As long as you have money in your pocket, use it instead of credit card. If necessary, use your money because when you have credit card you will tend to buy things that are not important.

[melchface]

Hi,

Yes, you can have credit card.I would like to suggest you some tips while using credit cards and are Have a watch on Interest Rate..Try not to carry balance,try to pay it in full.Be aware of the terms and costs when shopping for a student credit card.

Good luck.,..