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Does a college student need a credit card? Better yet, should a college student apply for a credit card?
We all know that new credit card laws have made it more difficult for college students to obtain a student credit card. Now college students (and anyone that signs for them) need to think twice before getting that first credit.
There are many responsible credit card usage tips that college students can follow. On the flip side, there are also many college students that will fall victim to the credit card debt trap at an early age.
The question that I often receive in some shape or form is- should a college student have a credit card?
My answer is simple- all college students should have a credit card.
Before a mob of parents runs after me with blazing torches, allow me to explain myself.
Benefits of a Credit Card For College Students:
1. Build your credit rating.
When you make your first major purchase, whether it be a car or home, you will realize that one thing is very important- your credit score. This number makes a world of a difference. Before you do anything else you need to read about the importance of a credit rating.
The earlier you get a credit card the early you can build your credit rating. Yes I do realize the flip side here but please bare with me and continue reading for now.
Your credit rating becomes very important as you graduate from college and progress through your 20s. If you begin building up your credit at an early age you'll notice some big wins.
2. Reap the benefits of a high credit score in your adult years.
A high credit score can save you a boatload of money over the period of a loan. A high credit score means that you have good credit. Good credit means that lenders feel it's less of a risk to loan you money. Since it's less risky to loan you money, you can receive a lower rate on major purchases when they happen, and believe me they will happen.
A lower rate may not seem like a big deal now, but trust me it will be one day. Unless you buy your first new car or first home with 100% cash, you're likely going to have to apply for a loan. You don't want to be in your 30s kicking yourself in the butt for messing up your credit or for having no credit.
3. Get used to a credit card.
Chances are very high that you're going to have to deal with a credit card for the rest of your life. There are adults that refuse to possess a credit card or are vehemently against credit cards (see: Adam Baker or Matt Jabs), but it's fairly rare to not have a credit card.
Cutting up your credit cards is too simple and it won't solve the problem. You should get into the habit of using a credit card and paying it off monthly ASAP.
Okay now let's go a bit further- what if you think the reasons for having a credit card are decent but you're still not fully convinced on student credit cards? A college student should only have a credit card under the following conditions:
Student Credit Card Conditions:
1. It's a student credit card with a minuscule limit.
A couple of hundred bucks to $500 max! Until you've mastered your financial situation completely you shouldn't accept anything over $500. A high amount of credit available to you can be very beneficial, but it can also ruin you financially if you don't control yourself. All college students should start off with the lowest limit possible and not increase it until income grows. On top of that, it's also becoming more difficult for college students to get more than $500 worth of credit.
2. The student credit card is used for reoccurring monthly expenses.
I've automated my credit card to pay for my gym membership, cell phone bill, and a few online subscriptions (I swear it's not porn!). A simple way to build your credit without buying useless junk is to automate reoccurring monthly expenses to your credit card. We all have monthly expenses. So why not simplify your financial situation and automate your monthly expenses with your credit card?
3. The credit card is only used in emergencies.
Yes I know that some will view an "emergency" as seeing a pair of jeans on sale at Banana Republic. This is where the $500 limit comes into play. Even if you lose control and splurge, you won't go bankrupt because of it. You'll probably have to suck it up and get an extra job to pay the credit card off, but you won't destroy your finances.
A credit card is also extremely critical in real emergencies. Shit will happen in life. There will be times when you need money to pay your way out of trouble. Whether it be paying for a tow truck while stuck on the side of the road in the winter to having your flight delayed. Hopefully this sort of thing doesn't happen to you. But if it does you can use your credit card and then pay it off with your emergency fund money when you get home
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When it comes to free credit reports there are plenty of offers. The election of a legitimate way to get free credit reports is an important part of the knowledge of your credit situation to pay without a lot of money to check with credit bureaus about your credit rating. There are three common and easy ways to access free credit reports. The first of these to see if you qualify for a free annual credit report through the government.
The law allows U.S. consumers to one free credit report each year. If requested, the credit agency you have a credit report and can not deny, for any reason. The only way to not get free credit reports quickly is that this provision, if you do not want to answer the questions of security that you are obliged to answer. These questions are designed to see what you know about the information on your credit report and information you should know. To use this option, you must go to AnnualCreditReport.com and request your free credit report. Your request can be made only from the website, by phone or by mail. You can not use this credit report directly from a credit reporting agency.
Second, you can be a free credit report that you are denied credit. To find a lender you turned a free copy of your credit report allowed by law. Once you are denied a loan, you will write a letter to the reasons for such denial and the name of the bureau, by which they got to get your credit report. At this point, you have 60 days to obtain a free credit report from the reporting agency or agencies that are listed in the denial letter. This will only allows you not to get a report from the agency and all three. But that's a good way is to check your credit report without paying for it. Although a good idea, only that as a last resort, because you often want to have problems in your credit report before the credit is not after they have been rejected are to be found.
Finally, you can get free credit reports through a credit monitoring service is free of charge. These are the many advertisements bombarding you on the radio, television and the Internet. The free credit report is your gift for trying the company's service. They often have 30 days to cancel your membership and not be called into account for a month. This is a good way to quickly see whether someone for credit in your name the application is to think you should, you are the victim of identity theft. However, it would be a good idea, this option only as a last resort because it can lead to much junk mail.
No matter who you use for your free credit reports is important that you have a hard copy of your credit report in a safe place. This way you always have a copy to the next time you refer a free credit report. Check your credit reports 1-4 times a year is the best way to protect your financial data.
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First, let me state the obvious – Pay your bills on time and check your report for accuracy. Of course you knew that. Now let's get to some lesser known techniques.
Hire an awesome credit recovery company to delete the unverifiable and inaccurate items from your credit report.
There simply is no better way to raise your score than to eliminate the causes of the low score. There are many companies to choose from, but a good rule of thumb is to remember, you get what you pay for. Also, companies who only dispute negative information are largely ineffective when it comes to getting rid of the stubborn items on your report. While I would humbly suggest that you look no further than GenuineCreditRecovery.com, I would also suggest that you stay away from "disputers." They typically charge low fees up front, but then drag the process out forever in order to compensate themselves for their "attractive" teaser rates. In the end, you will still have paid big AND you will have some negatives on your report that will inevitably keep your score grounded, so why bother with them in the first place?
Having a Long and Good History is Vital, So Don't Close Unused Accounts.
One of the factors considered when calculating your credit score is the length of time you've had the credit established with each creditor. You're rewarded for having a positive, long-term history with each creditor, even if the account is inactive or not used. The longer your positive credit history is with each creditor, the better. If you have credit cards you never use, instead of closing the accounts, simply put the credit cards in a safe place and forget about them. It may even be a good thing to take them out of retirement and use them, but only if you can pay off the entire balance next month.
Keep Your Credit Card Balances Low.
Having a balance that represents 35 percent or more of your overall available credit limit on each card will actually hurt you, even if you make all of your payments on-time and consistently pay more than the minimum due. If you have a $1,000 credit limit on a credit card, ideally, you want to maintain a balance of less than $350, and make timely monthly payments on the balance that are above the required monthly minimums – preferably the full balance.
Depending on your personal situation, it could make sense to spread your credit card debt over three, four, or five cards, while keeping your balance on each of them below that 35 percent of the total credit limit mark, as opposed to maxing out one credit card. If you do this, make timely payments on each card and keep them all in good standing.
Piggyback on someone else's good credit.
This is a great little credit score booster and it's fast (about 30 days). But it requires a very trusting relationship. Simply put, someone else adds you to their credit account. For example, when applying for a credit card, you may have seen the section to add a card holder. If your trusting person adds you, their payment history is now reported on your credit report too. If they have perfect credit, now you have a perfect account. If you default, however, you won't be the only one who suffers. The co-signer has basically promised to make good on this account, so any delinquencies will show up on her credit report as well. Please keep in mind; if they blow it, it's blown for you as well.
To make this more effective, use an aged account. Imagine if your trusted person has a 10 year old credit card account with a perfect payment history and a balance of only 30% of the credit limit. This would do wonders for your credit report? The easy part is your trusted person just calls the credit card company and requests a form to add a cardholder. Once completed and activated, their entire account history and future is now firmly planted on your account. Imagine if you secured 3-5 of these accounts - especially installment accounts. Your credit score could sky-rocket!
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There are several ways to fixing credit and when you have bad credit scores then you must look into restoring your credit. You'll enjoy a rise in your financial freedom whenever you take steps toward weak credit repair. Low credit score can be detrimental to your financial well being. You may have constant phone calls to your home from creditors and the battle might seem impossible. You may make less money than you can financially afford to pay toward your monthly bills. This is called being upside down in your bills. It is possible to get on the path toward fixing credit even though it may appear impossible. You might have poor credit for many reasons. You could have medical bills, credit card bills, and many more bills that are overwhelmingly high. Regardless of what the reason is, when your credit scores are low it is viewed a number of ways. First, your debt to earnings are reviewed. Creditors look at the amount of money you have on your credit versus how much money that you make. Also, if you've many debts that are a small amount unpaid, this looks very bad too. However, the biggest way a company looks at your credit score is the fact that it shows you don't pay your bills. This means you cannot be trusted with paying back a credit or a loan. The better your credit rating will be a lot more a business will trust you with paying back the loan.
When you have low credit score it's next to near unattainable a loan for anything. You won't be capable of geting credit cards, buy a home, a car, or get credit for anything you might need. In most cases, if a person does extend you a personal credit line your rate of interest is very high. When you are given a high interest rate then you're almost paying double for the initial line of credit. Whenever you make the decision to repair your credit with a repair my credit toolkit then you're taking the first step to a better financial situation. Remember, bad credit means higher rates of interest. It also means if you have a financial emergency, you can qualify for a line of credit to help you make it through your problems. You have the financial freedom to buy things like boats, cars, and more. You also have a better monthly interest on your credit line. Through our credit score improvement tutorials you will find that the first thing you need to do to take a step toward free credit repair is to get a copy of each of your a credit report. There are three primary credit reporting agencies. You are entitled to one free report from each of these agencies a year. You should compare the three reports and write down all of your debts that appear to be damaging to your credit.
Once you start your credit repair the fastest way to get started is to highlight all the a small amount that you can afford to pay. These look the worst on your credit. If you think you can repair your credit on your own then you can. You should start with the smaller amounts first. You should call one creditor at a time. Call each of the creditors and ask them for the payoff amount. Most creditors who show negative on your credit will be happy to get anything. Most of your creditors will accept a deal to pay 60% of the debt owed rather than the full amount. If they accept a deal with you then you should have this agreement faxed to you. You should also demand a receipt for payment and attach to the agreement. Once you pay on a debt on your credit report it may take up to 60 days to reflect on your credit report as being paid. Remember that although you pay a debt off on your report, it will remain on your report. If you need credit repair help because your debt and bills seem too overwhelming for you to handle then you can find many places that offer free credit repair. You should be cautious about people you use to help you repair your credit because there are a lot of fraudsters out there who will make promises they cannot keep.
It is important is that companies who offer to repair bad credit for free should never charge you for anything up front. They might offer services that do have fees in addition to improving your credit rating. These fees might include the cost of copies being made and other things. However, you should not agree to any fees if a company tries to charge you for repairing your credit.
Yet another thing people forget is that when they go in to restore my credit businesses they might hear that debts can be erased from a credit report. Many people who are dishonestly trying to provide services to people with low credit score will make promises like this. No one can erase negative information. The only real kind of information that can be removed from a credit report is information that is incorrect. A bankruptcy will also remain on your credit report for ten years. If you had bills like credit cards and you fell behind on them for a month or two and then caught back up on them, this too will reflect on your credit track record. Falling behind on your bills can remain on your credit report for up to seven years, even if you have been caught up for a year. A credit repair company helps many people with bad credit report repair issues. Most of the companies will sit down with you and total all of your debts. They will give you consolidation services to help you pay back your debts. Consolidation of your debts is often the best solution if you are paying a bill here and a bill there. It is easy to lose track of which bill to pay this month or next month and a credit repair company can help you get back on track financially. A credit repair agency will use credit repair software to help you organize your debts. You will work with a consultant who will go over all of your bills and your current income. It is important to remember that your most important bills are the bills of necessity for living. These are your rent, electricity, water, trash, and food. Any other bills you are used to paying will be set aside with your debt and not listed as living expenses.
The company will also help you review your spending habits. You may be used to shopping online or eating out at a restaurant every day during the work week. Your spending habits will be assessed and stopped. You can save a lot of money by taking lunch to work with you or by going home for lunch instead of eating out. Once the company has assessed your bills, your income, and your spending habits they will figure out how much extra earnings you can afford for a monthly payment toward your debt each month. The fantastic thing about this is that when a company consolidates your debt for you, then you make only one monthly instalment toward your debt. The company will disburse your monthly payment among your creditors accordingly. If there are things on your credit report that are not accurate the company will help you prepare a credit improvement letter to the reporting agencies to dispute things on your credit. They'll help you every step of the way work toward getting your credit back on track. When you make a decision for bad credit report repair and to go with a company then you'll receive a detailed written contract. By law, if you go through a company that is for profit, nonprofit, banks, credit unions, and creditors, you are allowed three days to back out of the written agreement. They must give you a full explanation of all of your legal rights. In addition, they cannot demand any form of payment until all promises have been kept by the company. If the company is demanding money up front then you should go with a company who is not in it for the money. Remember, there are many nonprofit governmental agencies made to help people get their credit back on track.
There's lots of things you must be aware of when you're thinking about credit improvement. If you receive an email about credit repair then you should be leery. Be sure to research the company and confirm they can really help you. Most emails sent out about credit repair are normally fraudulent and dishonest. Just remember never to pay any money up front for your credit help. Another thing you should keep in mind is that some fraudulent companies tell consumers that they can help them create a second credit file. They might offer a new social security or tax identification number. Not only does this promise not work but it is considered illegal. The term for a promise like this is called file segregation. No one can give you a new social security number but the Social Security Administration office. There are very rare instances of new numbers being given out in situations of witness protection programs with the government, and serious cases of an identity being stolen. Keep in mind that whatever you feel to be serious and what they consider serious are extremely different. There's also thousands of identity thefts that occur on a daily basis. This also has caused the Social Security Administration to consider these issues even less today. If a credit professional makes a promise to you that sounds too good to be true then it probably is.
Whenever you make a decision to repair your bad credit you are taking the first step toward your financial freedom. You can fix your credit score on your own or you can seek credit counseling from a credit repair firm. This is usually your best option for individuals that are upside down in their bills and the phone will not stop ringing from creditors. An organization will let you prioritize your regular debts. They can also give you the benefit of one easy payment per month that'll be applied to all of your debts. You won't have to worry about creditors anymore simply because they will take care of everything for you. When you repair your bad credit then you can have the financial freedom to have credit extended to you for those things you really want or that house you have been working so hard to qualify for. Don't let your bad credit be a detriment to your financial freedom with poor interest rates and denials anymore. You will get back on track with a positive credit scores.
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For the millions of consumers in the UK with bad credit and no credit, getting approved for a major credit card takes a tremendous amount of effort and time. Unfortunately, establishing credit is as equally challenging as re-establishing or rebuilding credit. Creditors and credit card companies consider both types of people as risky applicants, and in these challenging times, credit card companies are now more than ever checking the applicants credit worthiness. Thus, they are less eager to extend a line of credit. However, there are ways to get around these problems. Credit cards designed to build and re-build credit are intended to make it easier for some to obtain credit. Barclaycard and Vanquis both have credit cards designed to help.
The Importance of Establishing a Good Credit History
Even with poor credit, you will be able to finance many purchases such as a home or vehicle. However, good credit has certain advantages. Those with a high credit score receive prime rates on home loans and auto loans. For some, low rates may not be a huge deal. Yet, low interest rates on loans can potentially save you hundreds each month. Moreover, having good credit unlocks the door to better financing alternatives.
Similarities Between Having No Credit and Bad Credit
Unfair as it may be, some lenders group those with no credit and individuals with poor credit into the same category. This makes it harder for young people and those trying to establish credit. Individuals with poor credit made certain mistakes that justify a lender's reluctance. On the other hand, those with no credit history have zero credit mistakes. So, why do some lenders deny credit to those with no credit history? In a nutshell, before granting a credit card or loan, lenders will review credit reports to examine past relationships with other creditors. It's a way to determine an applicant's likelihood of repaying funds. If you have no credit history, lenders become uncertain. Instead of taking a gamble, they rather deny an application.
Getting Approved for a Bad Credit Credit Card
Getting approved for a bad credit credit card is easy. The tricky part is finding a lender that specializes in this sort of credit. Use the internet to your advantage. Many bad credit credit card lenders offer online applications and instant approvals. If you are hoping to build a good credit history, this is one of the easiest approaches. There are two types of bad credit credit cards. If you are approved for an unsecured card, you may receive an initial low credit limit. However, as you maintain regular payments, the creditor may gradually increase the spending limit. With a secured credit card, applicants must open a saving account with the lender. In the event that you decide to stop making payments, this account serves as collateral.
Credit Scores and Rebuilding your Credit History
A credit score reflects credit payment patterns over time, with more emphasis on recent information. Ways to improve a credit score generally include the following:
. Pay your bills on time. Delinquent payments and collections can have a major negative impact on a credit score.
. Keep balances low on credit cards and other "revolving credit." High outstanding debt can affect a credit score.
. Apply for and open new credit accounts only as needed. Don't open accounts just to have a better credit mix. It probably won't improve your credit score.
. Pay off debt rather than moving it around. Also, don't close unused cards as a short-term strategy to improve your credit score. Owing the same amount but having fewer open accounts may lower your credit score.
Review your Experian credit score regularly so you know what is being reported. It won't affect your credit score to request and check your own. Get immediate online access to your Experian credit report and credit score. Order now!
Items that Improve Credit Scores
Paying your bills on time is the single most important contributor to a good credit score. Even if the debt you owe is a small amount, it is crucial that you make payments on time. In addition, you should minimize outstanding debt, avoid overextending yourself and refrain from applying for credit needlessly. Applications for credit show up as inquiries on your credit report, indicating to lenders that you may be taking on new debt. It may be to your advantage to use the credit you already have to prove your ongoing ability to manage credit responsibly.
If you do have negative information on your credit report, such as late payments, a public record item (e.g., bankruptcy) or too many inquiries, you may want to pay your bills and wait. Time is your ally in improving your credit scores. There is no quick fix for bad credit scores. One common question that many consumers have regarding their credit score involves understanding how very specific actions will affect it. For example, someone might ask if closing two of his or her revolving accounts would improve his or her credit score. While this question may appear to be easy to answer, there are many factors to consider. Credit scores are based entirely on the information found on an individual's credit scores. Any change to the credit report could affect the individual's credit score. Simply closing two accounts not only lowers the number of open revolving accounts (which generally will improve credit scores), but it also decreases the total amount of available credit. That results in a higher utilization rate, also called the balance-to-limit ratio (which generally lowers scores).
As you can see, one seemingly simple change actually affects many items on the credit report. Therefore, it is impossible to provide a completely accurate assessment of how one specific action will affect a person's credit score. This is why the credit risk factors provided with your score are important. They identify what elements from your credit history are having the greatest impact so that you can take appropriate action.
How Long Does It Take to Rebuild a Credit Score?
Actually, you don't rebuild the credit score. You rebuild your credit history, which then is reflected by your credit score. The length of time to rebuild your credit history after a negative change depends on the reasons behind the change. Most negative changes in credit scores are due to the addition of a negative element to your credit report, such as a delinquency or collection account. These new elements will continue to affect your credit scores until they reach a certain age. Delinquencies remain on your credit report for seven years. Most public record items remain on your credit report for seven years, although some bankruptcies may remain for 10 years and unpaid tax liens remain for 15 years. Inquiries remain on your report for two years.
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