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Credit Cards for College Students Establishing Your Credit (PDF)

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					Title:
Credit Cards for College Students - Establishing Your Credit


Word Count:
613


Summary:
This article describes how credit cards for college students can help young people to establish credit.



Keywords:
Student Credit Cards,Credit Cards for College Students,Student Credit Card



Article Body:
For many young adults, the thought of building a credit history and worrying about a credit score seems
unusual. To them the only real draw to a student credit card is the idea of getting the things they want or
need with just the swipe of a card. It is also a method for getting the things they need while away at school,
such as paying rent, purchasing books, paying tuition, and purchasing items such as food and clothes.
Student credit cards are a great way to establish credit and to build a credit history, but they need to be used
wisely.


The Credit Score


College students may not realize it, but student credit cards are often the first step toward establishing a
credit score. A credit score is a number determined by the credit bureaus. Each of the three credit bureaus
has its own method for accumulating credit information and for developing a credit score, but they are
generally approximately the same. This number is used by lending institutions and other businesses to
determine whether or not you are a financial risk. Even phone companies often look at the credit score to
decide if they will grant you a phone line.


The lower your credit score, the greater risk you are to the eyes of businesses. Certain financial decisions
have an impact on your credit score and will raise it or lower it. Having very little credit history, for
example, reflects negatively on your score. The same is true for failure to pay off outstanding debts or to
pay bills on time. Credit cards for college students can go a long way toward establishing a good credit
score if handled wisely.


Building a Relationship


Studies have shown that those who get student credit cards tend to keep the credit card well into their 20s.
This is advantageous to the credit card company because it means a long term relationship has been
established with the customer. This can also be good for the cardholder. Maintaining a long term
relationship with a lending institution reflects positively on your credit score if you have made all of you
payments on time and have handled your financial responsibilities in a positive manner.


Building Your Credit History and Improving Your Credit Score


Once a young adult obtains a student credit card, he or she should definitely use it as often as possible. In
fact, it is a good idea to make all of your purchases with your student credit card. First of all, most credit
cards provide benefits such as purchase protection and extended warranties when used to make purchases.
Secondly, making purchases with a student credit card is far more convenient than using cash. Finally, and
perhaps most importantly, the money you borrow is reflected on your credit report. The more money you
can show that you have borrowed - and paid back on time - the higher your credit score will be.


This leads to the next point. A student credit card does very little good if you only spend with it, but never
pay it back. If you fail to pay back the money you borrowed with your student credit card or if you make
your payments late, you will hurt your credit score. Therefore, you need to be sure to handle your student
credit card responsibly.


What to Look For


Most student credit cards report transactions to the three major credit bureaus, but this isn't always the truth.
This is particularly true with secured student credit cards. Therefore, you should make sure the credit card
does report to the credit bureaus. Otherwise, it will not help in establishing your credit because it will go
unnoticed.




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posted:12/31/2011
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