For most students, going away to college is the first time they have lived on their own. You have to learn to make your own decisions, from what you eat to what your financial future will hold. One of the things you should do at this time is start to build a good credit score by using a credit card properly.
Choosing Your Credit Card
There are lots of things to consider when you research credit cards. The interest rate or APR is especially important if you are going to be carrying a balance from month to month, which you should not plan on doing. Different credit cards also offer benefits that you can use, such as earning cash back on some or all purchases, which in many cases can be applied back to your credit card balance.
Applying for a Credit Card
One of the things that will affect your ability to get a credit card is your FICO score. You should make it a regular practice to review your credit report and ensure that there are no errors, which can negatively impact your credit score. Knowing this three-digit value will be beneficial when you go to apply for a credit card.
When you apply for a credit card, you are usually going to need to prove that you can make the payments associated with having a credit card. Companies may verify the amount of income you bring in and will generally review current payment obligations, such as other loan payments or rental payments. As a student, you may need to provide information on your college, including proof that you are currently enrolled in an educational program.
When you decide to apply for a credit card, do not apply for a lot of cards at one. Too many providers looking into your credit history can actually have a negative impact on your credit score. These are “hard” inquiries and can make it seem like you are about to take on more debt or are having a hard time being accepted by credit card or lending companies. You can compare that to “soft” inquiries, which don’t impact your credit score in the same way, and include you getting a copy of your own credit report.
Once You Have Your Credit Card
Once you have received a credit card, it’s time to practice good credit habits. Pay off your credit card balance regularly, so that you don’t end up paying interest. Doing this will also improve your credit score. Regularly check your account to ensure there are no fraudulent charges, as you usually only have a limited period of time before you can make a claim about fraud. In addition, you should check your credit history regularly: you can get a free copy of your report from each of the credit reporting agencies annually.
Having a credit card is an important step that will affect your financial and credit history. Making mistakes in college can impact you for years to come, so it’s important to practice due diligence when getting your card.