teens and credit question

[Anonymous]

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@rosa29617 wrote:

@Anonymous daughter recently turned 18 yrs old. she went to her bank (BoA) and applied for a student credit card. she is a full-time student @ a local community college and she also works part-time. she said after she applied for the card, the banker said she should get a response within two weeks. with no prior credit history, i'm thinking she is denied. if anyone on this board have any idea what may have happened, please let me know. i'm used to hearing the two-weeks thing and usually that means the banker know already that you've been denied but would rather you receive the response in the mail. i'm open to any suggestions. also, i'm aware of the new law regarding students. my daughter has been working for three years now; just haven't had a credit file. thanks for any suggestions!

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I remembered seeing news articles about  teens and the credit law recently published online so I went to look it up. The law has made it more difficuly for teens to obtain credit by implementing the following "safeguards":

• card issuers are prohibited from offering free merchandise to lure students to sign up for a card on college campuses, at college sponsored events or within 1000 feet of the campus
• The legislation bans credit cards for people younger than 21 unless a parent or other adult will co-sign the application or the young adult can show proof of enough income to pay the debts. Even then, an adult will have to give written permission for the credit limit on the card to be raised.

[rosa29617]

UPDATE...Thanks for all of your replies. My daughter received a denial letter in the mail earlier this week.  The reason: Insufficient number of credit references and no revolving credit accounts. The only thing that's listed on my her credit report is her student loan (>$1200). The source of the report was Experian. So, she is very new to credit and I have taken some of your advice and asked her not to apply for other cards from mainstream banks. I took her to my credit union and had her open a savings acct ($5 minimum); then she applied for a cc with the cu and was approved instantly, but with only $300 limit (not bad for first timer). The branch manager there knows me; I've been with them for 13 plus years; don't know if that was a factor. I am just greatful that she (daughter) has this beginning. I agree with some on this board that many banks are phasing out student cc's. Its going to be tough for young people. No credit can be just as bad as 'bad' credit. I don't see any reason why a young, employed, student should not be given a chance; however, I am most greatful that I did not have to co-sign for my daughter's cc; YIPEEEE! Thanks again for all of your help!

[lkcrew426]

I would also suggest a US Bank college rewards visa. It is a good card for the college student. I started with a $500 limit on it 3 years ago in my freshman year of college. I had aboslutely no credit history. Now the card has grown with me to become a $3500 card today.  It also has decent rewards.  I think it would be a great tool to help her develop her credit.

[OptimalFICO]

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@Anonymous wrote:

I remembered seeing news articles about  teens and the credit law recently published online so I went to look it up. The law has made it more difficuly for teens to obtain credit by implementing the following "safeguards":

• card issuers are prohibited from offering free merchandise to lure students to sign up for a card on college campuses, at college sponsored events or within 1000 feet of the campus
• The legislation bans credit cards for people younger than 21 unless a parent or other adult will co-sign the application or the young adult can show proof of enough income to pay the debts. Even then, an adult will have to give written permission for the credit limit on the card to be raised.

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I wonder if this will impact Secured Credit Cards? Credit Unions IMHO are definitely better for student credit cards.

I had heard that one should never ever build credit with a cosigner. First there is the risk for the cosigner. But other than that, apparently once a creditor sees that you can get a co-signer, they will always want one! I would highly recommend getting a secured credit card to build credit. Here's an article with ten great questions to ask before you decide on one:

http://www.bankrate.com/finance/credit-cards/10-questions-before-getting-a-secured-credit-card-1.aspx

1. What is a secured credit card?
2. Where can I get a secured credit card?
3. What kind of charges will there be?
4. How much money do I have to deposit?
5. Do all banks offer secured credit cards?
6. Are there any problems to watch out for?
7. Do you report to all three major credit bureaus?
8. How long does it take to qualify for an unsecured card?
9. How much interest will my deposit earn?
10. How can I make the best use of a secured card to build my credit rating?

Very interesting -- here is the verbiage about qualifying for the Wells Fargo College VISA to build credit:

To qualify for the Wells Fargo College or Wells Fargo Cash Back College credit card, students must be the age of majority/emancipation in the state of residence, show proof of enrollment in an accredited college, university or trade school, and meet other credit qualifications. Credit lines range from $500-2500. Applicants under the age of 21 must be able to demonstrate the ability to individually repay their debt. Applicants who do not meet this criterion will be required to obtain a co-applicant who is 21 or older with an ability to repay the debt. Students with an income of more than $12,000 a year should apply for the Wells Fargo Platinum credit card instead.

[OptimalFICO]

Check out Digital Federal Credit Union --

They have what's called a Visa CashPak

Includes Free Checking, a DCU Check Card, PC Loan, and more (for members aged 17 to 22 years).

• Helping young adults manage their finances
• Preparing young adults for their after school financial lives
• Giving parents tools to help their children away at college or at their jobs

If your son or daughter is heading for college next semester, tuition, books, and fees are only the beginning. Or if they're at home or in an apartment working they need to financially plan. They'll need to start budgeting for food, supplies, a computer, clothes, entertainment, and maybe even a car.

CashPak gives you ways to give your child (age 17 to 22) convenient access to their funds. At the same time, they'll learn how to use the financial products such as checking, using a cash card, a visa card, getting a loan and other financial products they'll need as adults.

You can become eligible to join DCU by joining a variety of nonprofits (tax deductible as a charitable contribution) - first year only, then once a member always a member. Check their eligibility section.

And also check into Addison Avenue Federal Credit Union's secured card.