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My boyfriend is graduating with his master's degree in a few weeks. While he has a scary amount of student loans, he has never had a credit card. In about 6 months, we plan to move in together to a big city, and we want to do whatever we can so he can establish some credit by the time we're trying to find an apartment. My credit is great- last time I checked it about a year and a half ago, my fico was 770, and I'm paying off my credit card debt entirely next month (still have car/student loans though.
He currently banks with a credit union. Would he be better off trying to get his first card through the credit union (through his university) or through a national bank (that has branches in his current city as well as where we want to move), or somewhere else entirely? What's the best way for someone with only student loans to build credit?
Thanks for the advice! He actually has accounts withtwo different credit unions- one with the university he goes to (checking/savings), and a savings account with the Navy Federal Credit Union (his parents were both in the Navy and started this account a long time ago). Does it matter which one? He uses the university accounts more actively, but I'm not sure if that matters or not.
If I made him an AU on one of my accounts, would he need to actually use the card for it to show up on his report? Since I'm paying my only card with a balance off next month, I had planned on only using it for gas and PIF every month. (I had been carrying a balance that peaked at almost 5k and hovered around 2k for about 4 years, so I'm really hesitant to do ANYTHING that could jeopardize my having it completely paid off!)
@Anonymous wrote:Thanks for the advice! He actually has accounts withtwo different credit unions- one with the university he goes to (checking/savings), and a savings account with the Navy Federal Credit Union (his parents were both in the Navy and started this account a long time ago). Does it matter which one? He uses the university accounts more actively, but I'm not sure if that matters or not.
If I made him an AU on one of my accounts, would he need to actually use the card for it to show up on his report? Since I'm paying my only card with a balance off next month, I had planned on only using it for gas and PIF every month. (I had been carrying a balance that peaked at almost 5k and hovered around 2k for about 4 years, so I'm really hesitant to do ANYTHING that could jeopardize my having it completely paid off!)
Welcome to the forums.
He will inherit the entire history of the account and wouldn't need to ever use it in order for it to show on his reports.
Update:
He applied for a card at Chase, and ended up getting instantly approved for a student card with a $5k limit!!! The interest rate is extremely high.
Why would Chase approve such a high limit for someone with new credit? Are they just expecting to turn around and max it out?
Followup: Now that he has it- how much should he use it? Would a large purchase (a video camera he could use for freelance work- approx. $2k) be too much utilization for a $5k limit?
@Anonymous wrote:Update:
He applied for a card at Chase, and ended up getting instantly approved for a student card with a $5k limit!!! The interest rate is extremely high.
Why would Chase approve such a high limit for someone with new credit? Are they just expecting to turn around and max it out?
Followup: Now that he has it- how much should he use it? Would a large purchase (a video camera he could use for freelance work- approx. $2k) be too much utilization for a $5k limit?
Optimal credit utilization for FICO scoring purposes seems to be:
Total revolving utilization > 0 and < 9%, the lower the better, and
Reporting a balance on less than half of your revolving TL's, and
Reporting a balance on half or less of all TL's.
It's good that he app'd at Chase, because FICO likes to see at least one bank card/account.
If he decides to app for a card at PenFed, he may find they're more generous than Chase with CL's; which would help with keeping utilization down.
Good luck!