Advice and Questions on Building Credit From Scratch

[Anonymous]

I have been lurking here for a while trying to learn what I can. I have learned a good deal but I have some questions and want to make sure I do this right as opposed to just jumping into it.

I am a 20 year old college student/athlete and I turn 21 here in a few months. I graduate in May of 2017. I currently do not have any credit whatsoever. However, I am looking to start building it as soon and as fast as possible. If possible, I would ultimately like to have my credit high enough to qualify for an FHA loan within a few months of graduation (FHA minimum is 580, but I'd like to have my credit much higher than that by then). I would have started sooner but some crazy famly situations prevented me from doing so.

Being a current full time student, I only have an income of about $100 to $250 a month (varies due to athletics and other activities) from on campus jobs which I can verify via paystubs. I have around $1,500 in savings. I currently live off-campus with my mother and thus do not currently have any significant expenses (food and housing taken care of). I also have quite a bit of student loands that I will have to take care of upon graduation. 

I was planning on trying to get a secured card to start out with (still trying to figure out which would be best for my situation, any suggestions would be greatly appreciated). Use my card for minor purchases, whatever is 10% utilization and then pay it off every month. After a few months, hopefully I would be able to upgrade to an unsecured (if card allowed it) or at least raise my limits.  It is also my understanding that it would be best to ultimately have three different CC's. I have also thought about the possibility of a credit building loan but do not know if it's worth it?

Thoughts? What secured cards would you guys recommend I start with? 

[Anonymous]

Welcome to the board.  Base on your situation, start with a secured credit card.  Since you are a student, can your parents add you as an AU on any of their cards?  If they can do that, that will help you immersely.

Then once you get a summer job, you can apply for cards with companies that like thin profiles.

[Anonymous]

I recommend you try for discover. There's a little known secured card from discover that's only offered if they don't approve you for the regular card.

Why the discover? If you get the regular discover it then fantastic! If they offer you the secured card they will graduate you to the full card in time. It's definitely a product that will grow with you over time.

Not all secured cards available will eventually graduate into a regular card. Since the age of accounts factors heavily into your score, it's best to know if those that will.

[SouthJamaica]

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@Anonymous wrote:

I have been lurking here for a while trying to learn what I can. I have learned a good deal but I have some questions and want to make sure I do this right as opposed to just jumping into it.

I am a 20 year old college student/athlete and I turn 21 here in a few months. I graduate in May of 2017. I currently do not have any credit whatsoever. However, I am looking to start building it as soon and as fast as possible. If possible, I would ultimately like to have my credit high enough to qualify for an FHA loan within a few months of graduation (FHA minimum is 580, but I'd like to have my credit much higher than that by then). I would have started sooner but some crazy famly situations prevented me from doing so.

Being a current full time student, I only have an income of about $100 to $250 a month (varies due to athletics and other activities) from on campus jobs which I can verify via paystubs. I have around $1,500 in savings. I currently live off-campus with my mother and thus do not currently have any significant expenses (food and housing taken care of). I also have quite a bit of student loands that I will have to take care of upon graduation. 

I was planning on trying to get a secured card to start out with (still trying to figure out which would be best for my situation, any suggestions would be greatly appreciated). Use my card for minor purchases, whatever is 10% utilization and then pay it off every month. After a few months, hopefully I would be able to upgrade to an unsecured (if card allowed it) or at least raise my limits.  It is also my understanding that it would be best to ultimately have three different CC's. I have also thought about the possibility of a credit building loan but do not know if it's worth it?

Thoughts? What secured cards would you guys recommend I start with? 

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You probably don't need a secured card. Both Capital One and Discover have cards specifically designed for college students.

Start with those. Use them lightly and pay them off rapidly.

[Callandra]

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@SouthJamaica wrote:

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@Anonymous wrote:

I have been lurking here for a while trying to learn what I can. I have learned a good deal but I have some questions and want to make sure I do this right as opposed to just jumping into it.

I am a 20 year old college student/athlete and I turn 21 here in a few months. I graduate in May of 2017. I currently do not have any credit whatsoever. However, I am looking to start building it as soon and as fast as possible. If possible, I would ultimately like to have my credit high enough to qualify for an FHA loan within a few months of graduation (FHA minimum is 580, but I'd like to have my credit much higher than that by then). I would have started sooner but some crazy famly situations prevented me from doing so.

Being a current full time student, I only have an income of about $100 to $250 a month (varies due to athletics and other activities) from on campus jobs which I can verify via paystubs. I have around $1,500 in savings. I currently live off-campus with my mother and thus do not currently have any significant expenses (food and housing taken care of). I also have quite a bit of student loands that I will have to take care of upon graduation. 

I was planning on trying to get a secured card to start out with (still trying to figure out which would be best for my situation, any suggestions would be greatly appreciated). Use my card for minor purchases, whatever is 10% utilization and then pay it off every month. After a few months, hopefully I would be able to upgrade to an unsecured (if card allowed it) or at least raise my limits.  It is also my understanding that it would be best to ultimately have three different CC's. I have also thought about the possibility of a credit building loan but do not know if it's worth it?

Thoughts? What secured cards would you guys recommend I start with? 

---

You probably don't need a secured card. Both Capital One and Discover have cards specifically designed for college students.

Start with those. Use them lightly and pay them off rapidly.

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I agree. Cap1's Journey and Discover for Students are great places to start. Journey can also be PC'd to a QS later. 

[takeshi74]

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@Anonymous wrote:

Use my card for minor purchases, whatever is 10% utilization and then pay it off every month.

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Don't worry about 10% unless apping, requesting a CLI, APR reduction, etc.  Just aim to keep it under 30% generally.

As for which card, it really doesn't matter much at this stage.  I'd also suggest trying for an unsecured student card first.  If that doesn't work out then try secured.  You may want to consider secured cards that will graduate to unsecured.

[Anonymous]

"You may want to consider secured cards that will graduate to unsecured." 

That is what I was orginally thinking.

[Anonymous]

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@Callandra wrote:

I agree. Cap1's Journey and Discover for Students are great places to start. Journey can also be PC'd to a QS later. 

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With my current income (stated above) and no prior credit, you think there is a good chance I would get my application approved? Don't want to get denied on my first app as I don't think that would be the best way to start out.

[EAJuggalo]

You are almost exactly who those cards are made for.  I would think it unlikely that both would deny you, and once you have a foot in the door it's easier to get other cards.  

You can now app directly for the Discover secured if you'd rather go that route, but I'd personally at least try for one of the unsecureds first.  Who is your banking through?  If you don't have a credit union, get one.  They can be immensely helpful when starting out.

[Anonymous]

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@EAJuggalo wrote:

You are almost exactly who those cards are made for.  I would think it unlikely that both would deny you, and once you have a foot in the door it's easier to get other cards.  

You can now app directly for the Discover secured if you'd rather go that route, but I'd personally at least try for one of the unsecureds first.  Who is your banking through?  If you don't have a credit union, get one.  They can be immensely helpful when starting out.

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I don't currentrly have a credit union. There are several local ones around where I am though. You suggest I get one? Just for a checking account? If you wouldn't mind elaborating on how you found them helpful, I'd greatly appreciate it.