Establish Credit?

[Anonymous]

So, I'm currently a freshman at college, and I've been advised by couple of friends/family members to establish my credit history in order to save money in the long run in terms of interest when getting like an auto loan and mortgage.

Is this generally true?

Also, how do I establish credit? My friends from high school that went to college told me that's it very hard to get a credit card and even approved it's something like 200 dollars limit. Is it really worth my time and effort to apply for credit card to establish credit?

I'm just afraid that I'll overspend if I get a credit card because that's what I'm going to do.

Help please?

[Anonymous]

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@Anonymous wrote:

So, I'm currently a freshman at college, and I've been advised by couple of friends/family members to establish my credit history in order to save money in the long run in terms of interest when getting like an auto loan and mortgage.

Is this generally true?

Also, how do I establish credit? My friends from high school that went to college told me that's it very hard to get a credit card and even approved it's something like 200 dollars limit. Is it really worth my time and effort to apply for credit card to establish credit?

I'm just afraid that I'll overspend if I get a credit card because that's what I'm going to do.

Help please?

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I can see you became an credit expert now after doing all those credit research, it seems like you're planning for your future already, that's good

This reminds me of myself couple years ago, I became very concerned (or even paranoid) about credit history/cards until my parents told me "stop caring about saving interest and just pay for house and cars in cash" (that's literally what they said, speaking of maximum savings including inflations costs)

[Themanwhocan]

Well, generally you go to your bank and ask for a secured credit card to establish a credit history. Thats where you give them money to keep (that secures the loan), and they give you a credit card. So if you could give them $1000  they might give you a secured credit card with a $1000 limit. when you eventually close the secured card, you get your money back in a month or so.

But first, do you have a job? Thats rather important... Also, you might be able to get a student credit card without having to fork over money for a secured card.

Do you have student loans, or any other sort of past credit use (car loan, personal loan, etc)?

[Anonymous]

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@Anonymous wrote:

So, I'm currently a freshman at college, and I've been advised by couple of friends/family members to establish my credit history in order to save money in the long run in terms of interest when getting like an auto loan and mortgage.

Is this generally true?

Also, how do I establish credit? My friends from high school that went to college told me that's it very hard to get a credit card and even approved it's something like 200 dollars limit. Is it really worth my time and effort to apply for credit card to establish credit?

I'm just afraid that I'll overspend if I get a credit card because that's what I'm going to do.

Help please?

---

I'm was in a similar situation earlier this year. If you aren't planning on getting a car or house very soon, you don't need to rush into anything, but before you do get any loans, having excellent credit can absolutely save you money. One thing you might consider to establish credit would be to become an authorized user on a family member's credit card. It would be best to be added to an account with no late payments, a high credit limit, a low percentage of balance to limit (below 10% is best), and that has been open for a long time. Also, keep in mind that being added to an Amex will not help you as much because it will report as a new account. You could also try to get your own credit card. After you have been an authorized user for a while, you might want to check some banks prequalification sites for any card offers. If you get these offers, especially from banks like Chase which almost always mean you will be approved, you are more likely to be approved. Another way of getting your own card would be to get a secured card. A secured card is called "secured" because to open it, you give the bank a deposit, usually $200 or more. Most secured cards will give you a limit equal to the amount you deposited. You still have to pay off the card like a normal credit card. Make sure to be responsible with credit and pay your card on time. Pay in full if you can to save money on interest and stay out of debt. Many banks offer these, but make sure that the card you get can eventually "graduate" from secured to unsecured. Also, get cards with high interest and fees. With no credit history, and therefore no negative marks on your credit, you aren't forced to get a card like that. Once unsecured, your bank will return your deposit and you can try for better cards with higher limits and great benefits.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

So, I'm currently a freshman at college, and I've been advised by couple of friends/family members to establish my credit history in order to save money in the long run in terms of interest when getting like an auto loan and mortgage.

Is this generally true?

Also, how do I establish credit? My friends from high school that went to college told me that's it very hard to get a credit card and even approved it's something like 200 dollars limit. Is it really worth my time and effort to apply for credit card to establish credit?

I'm just afraid that I'll overspend if I get a credit card because that's what I'm going to do.

Help please?

---

I'm was in a similar situation earlier this year. If you aren't planning on getting a car or house very soon, you don't need to rush into anything, but before you do get any loans, having excellent credit can absolutely save you money. One thing you might consider to establish credit would be to become an authorized user on a family member's credit card. It would be best to be added to an account with no late payments, a high credit limit, a low percentage of balance to limit (below 10% is best), and that has been open for a long time. Also, keep in mind that being added to an Amex will not help you as much because it will report as a new account. You could also try to get your own credit card. After you have been an authorized user for a while, you might want to check some banks prequalification sites for any card offers. If you get these offers, especially from banks like Chase which almost always mean you will be approved, you are more likely to be approved. Another way of getting your own card would be to get a secured card. A secured card is called "secured" because to open it, you give the bank a deposit, usually $200 or more. Most secured cards will give you a limit equal to the amount you deposited. You still have to pay off the card like a normal credit card. Make sure to be responsible with credit and pay your card on time. Pay in full if you can to save money on interest and stay out of debt. Many banks offer these, but make sure that the card you get can eventually "graduate" from secured to unsecured. Also, get cards with high interest and fees. With no credit history, and therefore no negative marks on your credit, you aren't forced to get a card like that. Once unsecured, your bank will return your deposit and you can try for better cards with higher limits and great benefits.

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Who wants secured? it su*ks

OP: Just ask your parents to add you as an AU on their one or two "oldest" card issued by prime lenders and let your FICO generates. Then after like half a year just apply for like CSP, Everyday, BoA and you'll be approved.

[longtimelurker]

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@Anonymous wrote:

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This reminds me of myself couple years ago, I became very concerned (or even paranoid) about credit history/cards until my parents told me "stop caring about saving interest and just pay for house and cars in cash" (that's literally what they said, speaking of maximum savings including inflations costs)

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Interesting advice!   Not always practical of couse, and if when it is, not always true.   You need to consider what else you could do with the money vs interest cost of mortgage, and whether you can get a discount for cash from the seller etc.   

And my sympathies on being the least liked kid in the family.  Just keep reminding your parents that you didn't asked to be born while they were still students, more their choice!

[Anonymous]

The Capital one Journey card is one card you could possibly get approved for with no credit history . As long as you dont have any collections .

[Anonymous]

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@longtimelurker wrote:

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@Anonymous wrote:

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This reminds me of myself couple years ago, I became very concerned (or even paranoid) about credit history/cards until my parents told me "stop caring about saving interest and just pay for house and cars in cash" (that's literally what they said, speaking of maximum savings including inflations costs)

---

Interesting advice!   Not always practical of couse, and if when it is, not always true.   You need to consider what else you could do with the money vs interest cost of mortgage, and whether you can get a discount for cash from the seller etc.   

And my sympathies on being the least liked kid in the family.  Just keep reminding your parents that you didn't asked to be born while they were still students, more their choice!

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Cost of opportunity lol +1

 

[kdm31091]

You didn't mention if you have a job/income, that's kind of important, if not you will be probably limited to being an authorized user on someone's card.

If you do have income, a couple options for starting out are Capital One's secured card, or their Journey student card which is unsecured but by its nature should not be difficult to get. Discover IT for students may be an option also. Cap One's secured card doesn't offer any rewards but you have to take what you can get for now. Building a good credit file will definitely help you with loans later, your interest rates and terms will be far better vs. a bad or nonexistent credit file.

[JamesB95]

Hi Forum_Galore,

I am also a Freshman in college.

I opened my first credit card fresh out of High School when I had a part-time job. I didn't make much, and still do not make much. BUT, I do have a job is what counts. Secure a job (if you do not have one) and apply for a Student credit card. I'd recommend the Discover It Student. I started out with that in June and they gave me a $500 credit limit. Be VERY careful and do not spend more than you can pay off in a month. I did make that mistake and am a month or 2 behind on paying it, but, plan to catch up next month.

Good luck!