How to Get a Credit Card as a Student
As long as you are over the age of 18, you can qualify for a credit card. The challenge is obtaining that first card when you have little or no credit to back up your application. If you are a college student, you probably have more options than you realize. You just have to be familiar with those options. Here is a guide explaining how to get a credit card as a student.
Look for Student Credit Cards
There are many student credit cards on the market that are specifically designed for people in college. These cards have low credit limits, but they provide an opportunity to develop a history on your credit report. In most situations, you will start off with a low credit limit such as $500 which may increase slightly after six months of prudent use. This will only happen if you keep up with your payments and use your card on a regular basis.
Some student credit cards offer small rewards programs to encourage you to spend more money. If you can pay your balance back regularly, these rewards are certainly worth looking into. Don’t buy something just for the rewards. Buy it because you have the money and you simply prefer using your card over cash. If you get too wrapped up in the hype of your rewards, you could quickly fall into debt.
Pay for a Secured Credit Card
A secured credit card is similar to a prepaid credit card, but it actually allows you to build credit. The only catch is that you have to put the money onto the card upfront to act as the line of credit. For instance, if you put $3,000 on your card when you got it, that would be your available balance. Once you make a transaction with the card, you would have to pay back whatever you charged to get the balance up to $3,000 again. You would be billed just like you would for a standard credit card.
Of course, you can get your deposit money back if you decide to cancel the card. Until then, you will be responsible for making payments. The secured card provider will make positive reports on your credit which will help you build your score. Once you have developed a decent amount of credit with the card, you may be able to qualify for a standard credit card with a higher balance than a student credit card. It is just a matter of how hard you are willing to work.
Get a Cosigner
If you cannot qualify for a credit card on your own, you might be able to use someone else’s credit to get started. This could be a parent, a grandparent or a friend of the family who has established credit and has a solid source of income. When you have this person to cosign with you, you are going to have more options than you would on your own. If you fail to make a payment though, the incident goes on the other person’s credit as well as yours. Your cosigner will be trusting you to make your payments on time, so you have to make sure you honor that. If you choose to act irresponsibly, you could negatively impact someone else’s credit score.
Find Other Ways to Build Credit
A credit card is not the only way for a student to build credit. Here are some other options:
- Get a payday loan. This is not a preferred method because these loans carry a very high interest rate, but it will be something that will show up on your credit. As long as you have been at your job for a few months and can prove your income, you can qualify.
- Get a secured loan. This is just like a secured credit card, but the money is issued to a bank account, not a card. You put forth money for the loan and then borrow against your initial deposit. Then, you make payments each month and build credit along the way. All you lose is whatever you spend on interest.
- Get some lease to own furniture. Not all rent-to-own furniture stores will report to the credit bureau, but some do, such as Aaron’s and some branches of Rent-A-Center. Leasing with the proper company could help with your furniture needs as well as benefiting your credit score.
- Put utility bills in your name. Pay every one of these bills on time and you will start to build a positive credit history.
- Get a car loan. This will probably be just as hard to obtain as a credit card, but it will be easier with money down. If you can save a decent sized down payment, you will have a better chance at being approved.
Now that you know how to get a credit card as a student, it is time to take the steps to make that happen. Building credit from the ground up is not easy, but it is far from impossible. See if one of the options above will work for you. You might be surprised by how soon you may qualify for a credit card.